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Nov. 21, 2016

The study, published in The Economic Journal, uses a 28-year panel on individual employment and daily weather-station readings to test the impacts of weather shocks on labor allocations. It finds that an increase in high-temperature days leads to a reduction in local employment, particularly for wage work and non-farm labor. Extreme heat also increases migration domestically from rural to urban areas and internationally to the U.S. The authors link these econometric findings with climate projections to simulate the predicted change in probability of working in a given sector and location in the year 2075, ceteris paribus. The results show that, under a medium emissions scenario, increases in extreme heat days may decrease local employment by up to 1.4% annually, and climate change may increase migration by 1.4%. These projections translate into 236,094 fewer individuals employed locally, 232,792 migrating to urban areas of Mexico, and 41,275 migrating to the U.S.

Katrina Jessoe and Ed Taylor are faculty members in the UC Davis ARE Department. Manning received his doctorate from UCD ARE and is now a member of the ARE faculty at Colorado State University. The study received funding from the William and Flora Hewlett Foundation, USDA, Mexico's CONACYT, and the UC Institute on Mexico, UCMEXUS.

Click here to read the full article.

Abstract

This paper evaluates the effects of annual fluctuations in weather on employment in rural Mexico to gain insight into the potential labour market implications of climate change. Using a 28-year panel on individual employment, we find that years with a high occurrence of heat lead to a reduction in local employment, particularly for wage work and non-farm labour. Extreme heat also increases migration domestically from rural to urban areas and internationally to the U.S. A medium emissions scenario implies that increases in extreme heat may decrease local employment by up to 1.4% and climate change may increase migration by 1.4%.

Citation

Jessoe, K., Manning, D. & J.E. Taylor. 2016. "Climate Change and Labour Allocation in Rural Mexico: Evidence from Annual Fluctuations in Weather." The Economic Journal, Accepted Author Manuscript.

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