UC Berkeley

The overall objective of this thesis is to analyze the determinants and welfare effects of changes in agricultural productivity, rural population size and exposure to weather shocks in developing nations. The thesis is organized in three chapters.

Chapter 1 analyzes the welfare and distributional effects of large dams in Sub Saharan Africa. The empirical strategy exploits the fact that, in Africa, a substantial number of dam construction was preceded by the establishment of international river basin treaties and authorities which dealt with the management of water resources and encouraged the construction of dams. Exploiting this policy context, this chapter develops an instrumental variable strategy using differences in suitability for dam(explained by differences in river gradients) between river basins within the same treaty basin to address the endogeneity of dam location. The results show that in river basins where a dam is built children are shorter and weigh less. These negative effects are amplified by recent adverse rainfall shocks. In river basins located downstream from a dam, child height and weight improve significantly. These gains are smaller when recent rainfall realizations were low. Taken together the findings demonstrate that dam construction in Sub-Saharan Africa clearly creates losers and winners showing the scope for more effective policymaking in order to capture the benefits

from investing in large dam while compensating those who would lose. An interesting area for future research is to analyze whether and how institutional quality could alleviate the unequal distribution of the costs and benefits of dam construction in Sub Saharan Africa.

Chapter 2 investigates how rural out-migration affects rural labor markets in developing countries. This question is of great importance given the role rural-urban and rural-rural population movements play in the process of structural transformation and economic development. As the Agricultural sector shrinks, workers leave rural areas for manufacturing and services jobs in cities. How does this process affect rural labor markets and the welfare of those who remain in rural areas? This paper examines this question empirically by investigating the effect of rural out-migration on rural wages using Brazilian population censuses from 1980 to 2000. I develop an approach for estimating the effect of rural out-migration on rural wages using the evidence that rural out-migration rates are different across cohorts of workers and that these differences change over time. The results indicate that a 10 percent increase in rural out-migration raises rural wages by 1 to 5 percent. This result suggests that rural out-migration flows in Brazil between 1991 and 2000 have increased wages by 3 to 6.5\%.

In chapter 3 I analyze the short-run and medium-run consequences of agricultural shocks on human capital accumulation using data from Zambia. Because of their large dependence on rain-fed agriculture, a large proportion of households in developing countries are particularly vulnerable to rainfall shocks. Moreover, the usual mechanisms for smoothing income or consumption(credit and insurance) may be missing or limited in such economies. Households' inability to transfer resources across time and state of the nature may lead them to adopt coping strategies that are detrimental to asset and human capital accumulation. Using data collected around two periods of drought in Southern Africa, I examine whether exposure to agricultural shocks affects schooling and whether these effects persist or diminish over time. I find that exposure to the droughts reduced enrollment rates by 10 percentage points and years of schooling by 8 percentage points in the short-run. I also find some evidence of partial catch-up in the medium-run which suggests that children exposed to the drought remained in school at older ages. These findings have important policy implications. They suggest that technologies to reduce rainfall shocks and safety nets may have large benefits in reducing delays and increasing the rate of human capital accumulation. Moreover education policies should target regions and individuals

exposed to agricultural or income shocks in order to limit drops in enrollment rates and facilitate the return of students who temporarily left school.