Climatic complexity: how do early life weather shocks affect labour income?

Abstract: This thesis explores the impact of extreme weather events during gestation and infancy on multiple outcomes, especially early labour income. The subjects are Indian children born between 1993/94 from the Young Lives longitudinal study. The weather shocks are extracted from the NOAA geo-referenced weather data. Thanks to Mediation Analysis methodology applied, not only the Direct Effects of early life weather shocks on income can be studied, but also the pathways that these shocks follow to impact income. The pathways, or mediators, considered here are physical and physiological health, cognitive level, educational attainment and child labour. The results suggest that suffering low temperatures in utero directly increase income at age 22 while suffering during infancy decreases it. Although there is no Direct Effect of rainfall shocks on income, it is observed that these have profound Indirect Effects on children’s outcomes, primarily through the educational attainment and child labour mediators. In addition, multiple differential effects by gender, trimester of gestation and season of the year are provided to enhance the understanding of these effects. The evidence is robust to changes in the definition of weather shocks.