Ph.d.-forsvar: Ashenafi Belayneh Ayenew:"Essays in Development Economics: Shocks, Insurance, and Health

The thesis consists of three self-contained chapters.

Chapter 1 investigates the effects of climatic water scarcity and drought on the spread of diarrheal disease, the leading cause of mortality and morbidity in young children. By linking a panel survey of children from Ethiopia to measures of climatic water scarcity and drought constructed from two high resolution geospatial climate series, I find evidence that climatic water scarcity significantly increases the spread of diarrheal disease. Further results reveal that a drought doubles the existing diarrheal disease prevalence in the country. These effects exist entirely in rural areas. I provide evidence on the validity of a couple of potential mechanisms that could explain part of the link between climatic water scarcity and incidence of diarrheal disease. I further document the roles of safety nets and access to infrastructure in this link. 

Chapter 2 builds upon Chapter 1 and further documents that climatic water scarcity and drought increases households’ credit demand and debt burden in rural Ethiopia. I show that households borrow exclusively informally in response to climatic water scarcity and drought. A higher disease burden is one of the mechanisms that explain the main results.

Chapter 3 examines rural households’ ex ante and ex post  labor adaptation to agricultural risk and shocks, respectively. Using a detailed panel survey of farm households from rural Mozambique matched to proxies of agricultural income risk and adverse shocks, I find suggestive evidence that households engage in ex ante labor adaptation by sending out members internationally. Robust findings show that households engage in contemporaneous ex post labor adaptation by sending out members both domestically and internationally