Urban Labor Supply Responses to Rural Drought Shocks: Uber in Uganda

• Development Workshop

Date and Location

Tuesday, December 1, 2020, 4:10 PM - 5:30 PM
933 988 20491, online Zoom

Abstract

Rural-urban linkages have long been a topic of study in the developing world. Remittances are often a key driver of these linkages and can act as insurance against rural weather shock risk, in the absence of availability and access to formal insurance products. The emergence of new technologies, such as gig economy platforms and mobile money, can be potentially transformative at allowing remittance flows to adjust more quickly to adverse shocks. I use a dataset of Uber driver labor supply and a rich dataset of weather indicators to estimate the effect of adverse weather shocks in rural areas on Uber drivers in Kampala, Uganda. Since I do not have explicit information on migrant status and rural connection, I leverage an external dataset of Ugandan voter registration and train a gradient boosting classifier on Ugandan surnames to predict which regions drivers are connected to. I develop a switching regression estimator to address the misclassification bias from the predictions. I find that a one standard deviation increase in the intensity of agricultural drought leads to an increase of 5.1 hours online in the month of the event (a 6% increase over average hours), providing suggestive evidence that Uber’s flexibility is used to buffer against adverse weather shocks