Does every Cloud have a Silver Lining?

Climate change disproportionately affects rural economies, particularly in poorer regions such as sub-Saharan Africa, where livelihoods depend on weather fluctuations. South Africa, a middle-income country located within a drought belt, has experienced exacerbated drought conditions in recent years. In 2015-2016, the country suffered the worst drought in decades, which substantially decreased food production (World Bank Group, 2021). To cope with weather events, households employ several strategies, including adjusting the human capital investments and labour supply responses of household members as a form of self-insurance. Rainfall shocks, as a proxy for agricultural productivity shocks, can affect the schoolwork decisions of adolescents and young adults in rural South Africa. Adolescents are particularly vulnerable as they may be forced to enter the labour market to cope with shocks, resulting in school termination and, consequently, long-lasting negative effects on human capital accumulation. Exploring the weather shocks-human capital nexus is crucial for South Africa, which has around 207,714, out-of-school adolescents and a low net secondary school enrollment rate of 70.3 % in 2019 (UNESCO, 2019).