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Impact of natural disasters on the income distribution

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  • Pleninger, Regina

Abstract

During the last decades, the United States experienced an increase in the number of natural disasters and their destructive capability. Several studies suggest a damaging effect of natural disasters on income. In this paper, I estimate the effects of natural disasters on the entire income distribution using county-level data in the United States. In particular, I determine the income fractions that are affected by natural disasters. The results suggest that in the short-term natural disasters primarily affect middle incomes, thereby leaving income inequality levels unchanged. In addition, the paper examines potential channels that intensify or mitigate the effects, such as unemployment insurance or disaster severity. The findings show that unemployment benefits are an important adaptation tool that reduces the effects of natural disasters. In contrast, the occurrence of multiple and severe disasters aggravate the effects. Finally, the analysis detects heterogeneous effects on incomes by disaster type.

Suggested Citation

  • Pleninger, Regina, 2022. "Impact of natural disasters on the income distribution," World Development, Elsevier, vol. 157(C).
    • Handle: RePEc:eee:wdevel:v:157:y:2022:i:c:s0305750x22001267
    DOI: 10.1016/j.worlddev.2022.105936
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    Cited by:

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    2. Naser Amanzadeh & Toshi H. Arimura & Mohammad Vesal & Seyed Farshad Fatemi Ardestani, 2021. "The Distributional Effects of Climate Change:Evidence from Iran," RIEEM Discussion Paper Series 2007, Research Institute for Environmental Economics and Management, Waseda University.
    3. Dang, Hai-Anh & Hallegatte, Stephane & Trinh, Trong-Anh, 2023. "Does Global Warming Worsen Poverty and Inequality? An Updated Review," IZA Discussion Papers 16570, Institute of Labor Economics (IZA).
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    5. Joseph, Iverson-Love, 2022. "The effect of natural disaster on economic growth: Evidence from a major earthquake in Haiti," World Development, Elsevier, vol. 159(C).

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    More about this item

    Keywords

    Disaster; Income distribution; United States; Migration;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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