Research Insights: Can Financial Inclusion Reduce Extreme Weather Impacts on Rural Children?

Extreme rainfall induces rural households to choose immediate benefits over long-run investments in education by increasing the incidence of child labor and household chores at the expense of school attendance. Over-indebtedness through pre-existing formal loans reinforces the likelihood that a child works due to rainfall shocks. Asset insurance, foreign remittances, and natural disaster aid reduce or eliminate the shock-induced shift toward domestic activities and away from schooling.