Natural circumstances and farm labor supply adjustment: the response of the farm labor supply to permanent and transitory natural events

Labor supply adjustment is one of the main mechanisms of farm households, which is often utilized to alleviate the impact of undesired natural circumstances. Nevertheless, how does the farm labor supply respond to the different attributes of natural circumstances, which may be permanent or transitory? This was an interesting research question and needed to be investigated. Therefore, using the matched data from the Socio-economic Survey (SES) of Thai Agricultural Households and Labor, the studies' survey of saline soil, the times series information on regional rainfall in the Northeastern region of Thailand, and the implementation of regression analysis, including the income decomposition technique based on the permanent income hypothesis, the results showed that both permanent and transitory income generated by natural events had a significant effect on the farm labor supply. The farm labor supply had a higher response to transitory income that was determined by rainfall variation compared to permanent income, which was determined by both natural and non-natural factors. There was also evidence that natural permanent income generated by a natural event had a higher impact than non-natural permanent income. Overall, this paper found that natural circumstances could deteriorate the welfare of farm households by forcing them to work harder. Government support should thus be provided both in the short and long run.