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Does Climate Change Affect the Formation of Human Capital in Thailand?

Aeggarchat Sirisankanan, Butsara Yongkhamcha

Abstract



Human capital is one of the main determinants of economic development. However, much of the literature on household human capital investment examines the relationship between exogenous variables such as fundamental household characteristics, and the government policies and the formation of human capital. Little attention has focused on the impact of climate change on human capital investment. This paper combines the Thai Household Socio-Economic Panel Survey during 2005-2007 with the regional rainfall data reported by 83 weather stations from 1988 to 2007 to gauge the impact of climate change on human capital investment in Thailand. Transitory income shock and income uncertainty due to rainfall variation are generated to examine its impact on two categories of human capital formation: educational spending and health spending. Controlling for household-head characteristics, child and other members characteristics, and regional characteristics; the empirical results reveal that climate change affects human capital formation in some Thai agricultural households and in some regions. Transitory income shock is negatively associated with educational expenditure when households throughout the country and northeastern region are used as a sample, while health expenditure negatively responds to transitory income shocks for sample households in the whole country and a group of central, eastern, and western regions.

Keywords


Climate change; transitory income shock; income uncertainty; human capital investment

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