Wealth, weather risk, and the composition and profitability of agricultural investments

Despite the growing evidence that farmers in low-income environments are risk-averse, there has been little empirical evidence on the importance of risk in shaping the actual allocation of production resources among farmers differentiated by wealth. The authors use panel data on investments in rural India to examine how the composition of productive and nonproductive asset holdings varies across farmers with different levels of total wealth and across farmers facing different degrees of weather risk. Income variability is a prominent feature of the experience of rural agents in low-income countries. The authors report evidence, based on measures of rainfall variability, that the agricultural investment portfolio behavior of farmers in such settings reflects risk aversion, due evidently to limitations on consumption-soothing mechanisms such as crop insurance or credit markets. The authors'results suggest that uninsured weather risk is a significant cause of lower efficiency and lower average incomes: a one-standard-deviation decrease in weather risk (measured by the standard deviation of the timing of the rainy season) would raise average profits by up to 35 percent among farmers in the lowest wealth quartile. Moreover, rainfall variability induces a more unequal distribution of average incomes for a given distribution of wealth. Wealthier farmers are willing to absorb significant risk without giving up profits to reduce production risk. Smaller farmers have to invest their limited wealth in ways that reduce their exposure to risk at the cost of lower profit rates. The authors found that at high levels of rainfall variability, differences in rates of profit per unit of agricultural assets were similar across classes of wealth. But over the sample range of rainfall variability, these rates of profit were always higher for the poorer farmers than for the wealthier ones, suggesting that the disadvantages of small farmers in risk diffusion are more than offset by their labor cost advantage.International Terrorism&Counterterrorism,Economic Theory&Research,Environmental Economics&Policies,Health Economics&Finance,Financial Intermediation

Wealth, Weather Risk and the Composition and Profitability of Agricultural Investments

Farm Management,

How infrastructure and financial institutions affect agricultural output and investment in India

How do the decisions of farmers, financial institutions, and government agencies interact and affect agricultural investment and output in a region - and to what extent are these"actors"influenced by a region's location and agroclimactic endowments (for example, rainfall or the soil's moisture-holding capacity). This paper presents an attempt to quantify the relationships between key factors, using district level time-series data from India.Economic Theory&Research,Agricultural Research,Financial Intermediation,Banks&Banking Reform,Environmental Economics&Policies

From Illegal to Legal: Estimating Previous Illegal Experience among New Legal Immigrants to the United States

This paper develops a framework for estimating previous illegal experience among annual cohorts of new legal immigrants to the United States – using public-use administrative microdata alone, survey data alone, and the two jointly – and provides estimates for the FY 1996 cohort of new immigrants, based on both administrative and survey data. Our procedures enable assessment of type of illegal experience, including entry without inspection, visa overstay, and unauthorized employment. We compare our estimates of previous illegal experience to estimates that would be obtained using administrative data alone; examine the extent of previous illegal experience by country of birth, immigrant class of admission, religion, and geographic residence in the United States; and estimate multivariate models of the probability of having previous illegal experience. To further assess origins and destinations, we carry out two kinds of contrasts, comparing formerly illegal new legal immigrants both to fellow immigrants who do not have previous illegal experience and also to the broader unauthorized population, the latter using estimates developed by DHS (2002), Passel (2002), and Costanzo et al. (2002).administrative data, legal immigration, illegal immigration, survey data

Immigration, health, and New York City: early results based on the U.S. new immigrant cohort of 2003

This article was presented at a conference organized by the Federal Reserve Bank of New York in April 2005, "Urban Dynamics in New York City." The goal of the conference was threefold: to examine the historical transformations of the engine-of-growth industries in New York and distill the main determinants of the city's historical dominance as well as the challenges to its continued success; to study the nature and evolution of immigration flows into New York; and to analyze recent trends in a range of socioeconomic outcomes, both for the general population and recent immigrants more specifically.Immigrants - New York (N.Y.) ; Medical care - New York (N.Y.) ; Economic conditions - New York (N.Y.) ; Federal Reserve District, 2nd

Immigrant Health--Selectivity and Acculturation

This paper explores some salient issues concerning immigrant health. Ethnic health disparities are inherently linked to immigration since ethnic identities often are traced to the country of origin of one's immigrant ancestors. Two of the central questions that have dominated the medical and social science literature on immigrant health are the central focus of this paper. These issues involve the magnitude and mechanisms shaping health selectivity and the determinants of health trajectories following immigration. As part of this paper, we also developed a theoretical model that attempts to explain the diversity in health selection among immigrants.