Vulnerability of Households to Weather Shocks and the Mitigating Role of Workfare Programs

Kailthya S

Abstract

Weather shocks pose significant income risks. Using a large household panel survey in India and geo-coded climate data, I find that rainfall shocks reduce income by 7%. It shrinks consumption and assets while increasing household-debt. Rainfall shocks exhibit significant heterogeneity. It predominantly affects the asset-poor and the rural households who typically rely on agriculture or non-agricultural wage incomes. Its impact also varies geographically. I then examine if the roll-out of a major public workfare program improved earnings of its participants in districts that were exposed to rainfall shocks. Using a difference-in-difference strategy and the phased roll-out of the program, I find that it primarily benefits female-headed households. Thus, intensifying workfare programs could increase climate resilience for the most vulnerable population.