Rainfall Variability, Migration, Off-farm Activities, and Transfers: Evidence from Rural Ethiopia

Abstract

This study investigates the impacts of rainfall variability on migration, off-farm activities and transfers in rural Ethiopia. We develop a unitary agricultural household model in which migration, (on-farm, off-farm, and urban) labor supplies and transfers are jointly determined. Hypotheses about the partial effects of rainfall shocks on these household decisions are derived from the theoretical framework and are tested using a multi-wave household survey combined with village-level weather dataset. We find that the share of out-migrated household members and per capita off-farm labor supply decrease with average rainfall in the main growing seasons, and increase with the standard deviation of average rainfall in the main growing seasons in the five years prior to the survey. The level and standard deviation of rainfall are shown to have indeterminate effects on the amount of transfers that households receive from the extended family or informal social safety nets.