When the Rain Stops Falling: Effects of Droughts on the Tunisian Labor Market

Federica Alfani, Giacomo Pallante, Alessandro Palma and Abdelkader Talhaoui

No 10766, Policy Research Working Paper Series from The World Bank

Abstract: This paper investigates the effects of severe drought shocks on Tunisia’s agriculture sector during 2000–19. Using labor force surveys aligned with granular weather data, it calculates the Standardized Potential Evapotranspiration Index to detect moderate-to-severe drought shocks at the governorate level and frames the analysis in a staggered difference-in-differences setting. The findings show that shocked areas experience a drop of 7.4 to 10.6 percentage points in agricultural employment with respect the untreated or not-yet-treated governorates. There is a contemporaneous opposite dynamic in the employment rate of low-skill and less climate-sensitive sectors, as well as a modest and transient increase in unemployment. The effects are largely heterogeneous across groups of workers, with very young individuals, women, and low-educated workers paying the highest toll.

Date: 2024-05-07
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