Heterogeneous and short-term effects of a changing climate on farmers’ labor allocation: An empirical analysis of China

There is growing interest in the impact of climate change on agricultural labor supply in China, rigorous empirical evidence for this issue is insufficient. This potentially important channel through which climate change may affect agricultural labor supply has not received attention. Using a panel survey data of 100 administrative villages and 2977 farmers in China, we find that temperature and precipitation do affect farmers’ labor allocation, 1°C increase from the current average temperature will reduce agricultural labor supply by 0.252%, and 1mm increase from the current average rainfall will reduce agricultural labor supply by 0.001%. Climate change also leads to the decline of net agricultural income, which creates distorted incentives for households to over-supply labor to non-agriculture. Moreover, farmers with relatively lower risk tolerance preferred to reduce the current supply of agricultural labor when net agricultural income is projected to decrease under climate change scenarios.