Climate scientists predict that the number of extreme heat days will increase in many parts of the developing world. This column reports research findings showing that the rising number of extremely hot days in rural Mexico will lead to meaningful reductions in local employment. In response to extreme heat, some local workers are migrating, either to urban areas of the country or to the United States. Rural labour markets in other less developed countries are likely to be similarly affected, with poor wage-labourer households being the most vulnerable to changes in local market conditions.
Climate change is predicted to bring increased incidence of extreme weather events, rising temperatures, melting icecaps and changing precipitation patterns. A growing body of research suggests that the economic costs of climate change may be substantial and far-reaching, affecting agriculture, mortality, labour productivity, economic growth, civil conflict and migration.
Ultimately, the magnitude of these costs will depend in part on how governments, institutions and people respond and adapt. The costs of climate change are expected to be particularly acute in developing countries. In these countries, farmers face limited access to credit, fertilizer, other agricultural inputs or government support, with a larger proportion of the population employed in agriculture.
The focus of our study is Mexico, where agriculture is one of the largest sectors of employment, providing work for more than 13% of the country’s population in 2016. We investigate the effects of temperature and precipitation on local employment decisions in rural Mexico, including the demand for hired labour, agricultural employment and non-agricultural employment.
One sector that might be quite responsive to extreme heat is rural labour. In Mexico, small traditional or subsistence farmers own or manage more than 77% of rural property. These farmers often do not have access to irrigation, credit or improved seeds. Perhaps because of this, agriculture is quite labour-intensive. Labour may be one of the only margins through which farmers can respond to extreme heat.
Our research, which uses nearly 30 years of nationally representative household survey data, is the first to evaluate the effect of extreme heat on the probability of local work in rural Mexico. We measure extreme heat in terms of ‘harmful degree days’ (HDDs), where each increase in the average temperature by 1º C above 32º on a given day translates into a 1º increase in HDDs.
We find that extreme heat reduces the probability of local work in rural Mexico, with a 1 HDD increase reducing the probability of local employment by 0.05 percentage points. These impacts are particularly acute for wage workers.
The negative impacts are not limited to agricultural employment: they reverberate into non-agricultural sectors of the rural economy, such as retail, services and construction. The probability of employment in those sectors declines by 0.04 percentage points per 1-unit increase in HDDs.
Rural labour responds to negative weather shocks through migration. We find that in response to extreme heat, local workers migrate, either to urban areas of Mexico or to the United States.
We use these econometric findings to project changes in rural employment and migration from climate change. All climate models predict that the number of extreme heat days will increase over a large part of Mexico.
Under a moderate emissions scenario, there is a decrease in local employment of up to 1.4% and an increase in migration to other parts of Mexico and to the United States of up to 1.4% and 0.25%, respectively. These projections translate into 236,094 fewer individuals employed locally, 232,792 migrating to urban areas of Mexico and 41,275 migrating to the United States.
Our results suggest that climate change will have an economically meaningful impact on rural labour markets in less developed countries. Extreme temperatures will affect local earning opportunities negatively. Poor wage-labourer households will be most vulnerable to these shocks, as their local employment opportunities are most sensitive to extreme heat.
Katrina Jessoe is an associate professor for the Department of Agricultural and Resource Economics at the University of California, Davis, where she specializes in environmental and energy economics.
Dale Manning is an assistant professor for the Department of Agricultural and Resource Economics at Colorado State University.
J. Edward Taylor is professor and vice chair of the Department of Agricultural and Resource Economics at the University of California, Davis.