Long-term Consequences of Short-term Precipitation Shocks: Evidence From Brazilian Migrant Households

We test for long-term damages from precipitation shocks in rural Brazil by observing wages of households that have permanently migrated from rural to urban areas. We find that large short-term precipitation shocks damage migrants’ long-term wages. We offer an analytical explanation for this outcome: credit-constrained households may be willing to accept lower wages in urban areas following the depletion of their productive assets during an adverse shock. Our empirical evidence indicates further exploration is warranted on the valuation of what mechanisms affected by natural disasters cause these long-term household losses experienced in Brazil. JEL Classification: O1, Q1, R2