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Natural disasters, self-Insurance, and human capital investment: Evidence from Bangladesh, Ethiopia, and Malawi

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Author Info

  • Yamauchi, Futoshi
  • Yohannes, Yisehac
  • Quisumbing, Agnes R.

Abstract

"This paper uses panel data from Bangladesh, Ethiopia, and Malawi to examine the impacts of disasters on dynamic human capital production. Our empirical results show that accumulation of biological human capital prior to a disaster helps children maintain investments during the post-disaster period. Biological human capital formed in early childhood (for example, good long-term nutritional status) helps insure resilience to disasters by protecting schooling investments and outcomes, even though disasters have negative impacts on the actual investments (for example, by destroying schools). In Bangladesh, children with more biological human capital are less adversely affected by flood, and the rate of investment increases with the initial human capital stock during the post-disaster recovery process. In Ethiopia and Malawi, where droughts are relatively frequent, repeated drought exposure reduces schooling investments in some cases, with larger negative impacts seen among children who embody less biological human capital. Asset holdings prior to disaster (especially intellectual human capital stock in the household) also help maintain schooling investments to at least the same degree as the stock of human capital accumulated in the children prior to the disaster. Our results suggest that as the frequency of natural disasters increases due to global warming, the insurance value of investments in child nutrition will increase. Public investments in child nutrition therefore have the potential to effectively protect long-term human capital formation among children who are vulnerable to natural disasters." from authors' abstract

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Bibliographic Info

Paper provided by International Food Policy Research Institute (IFPRI) in its series IFPRI discussion papers with number 881.

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Date of creation: 2009
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Handle: RePEc:fpr:ifprid:881

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Keywords: Disasters; Human capital; Nutrition; Schooling; Self-insurance; Poverty reduction; Social protection; Shocks; Asset dynamics; Education;

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References

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  1. Futoshi Yamauchi, 2008. "Early Childhood Nutrition, Schooling, and Sibling Inequality in a Dynamic Context: Evidence from South Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 56, pages 657-682.
  2. Ilan Noy, 2007. "The Macroeconomic Consequences of Disasters," Working Papers 200707, University of Hawaii at Manoa, Department of Economics.
  3. Hoddinott, John & Kinsey, Bill, 2001. " Child Growth in the Time of Drought," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(4), pages 409-36, September.
  4. Behrman, Jere R. & Murphy, Alexis & Quisumbing, Agnes R. & Yount, Kathryn, 2009. "Are returns to mothers' human capital realized in the next generation?: The impact of mothers' intellectual human capital and long-run nutritional status on children's human capital in Guatemala," IFPRI discussion papers 850, International Food Policy Research Institute (IFPRI).
  5. del Ninno, Carlo & Lundberg, Mattias, 2005. "Treading water: The long-term impact of the 1998 flood on nutrition in Bangladesh," Economics & Human Biology, Elsevier, vol. 3(1), pages 67-96, March.
  6. Alderman,Harold & Hoddinott, John & Kinsey, Bill, 2003. "Long-term consequences of early childhood malnutrition," FCND briefs 168, International Food Policy Research Institute (IFPRI).
  7. del Ninno, Carlo & Dorosh, Paul A. & Smith, Lisa C. & Roy, Dilip K., 2001. "The 1998 floods in Bangladesh: disaster impacts, household coping strategies, and responses," Research reports 122, International Food Policy Research Institute (IFPRI).
  8. Cunha, Flavio & Heckman, James J. & Lochner, Lance, 2006. "Interpreting the Evidence on Life Cycle Skill Formation," Handbook of the Economics of Education, Elsevier.
  9. Pitt, Mark M & Rosenzweig, Mark R, 1990. "Estimating the Intrahousehold Incidence of Illness: Child Health and Gender-Inequality in the Allocation of Time," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(4), pages 969-80, November.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. How to insure against natural disasters in the absence of insurance
    by Economic Logician in Economic Logic on 2009-05-18 20:15:00
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Cited by:
  1. Dang, Duc Anh, 2012. "On the sources of risk preferences in rural Vietnam," MPRA Paper 38058, University Library of Munich, Germany.
  2. Tim Lohse & Julio R. Robledo & Ulrich Schmidt, 2012. "Self‐Insurance and Self‐Protection as Public Goods," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 79(1), pages 57-76, 03.
  3. Eva Deuchert & Christina Felfe, 2013. "The Tempest: Natural Disasters, Early Shocks and Children's Short- and Long-Run Development," CESifo Working Paper Series 4168, CESifo Group Munich.
  4. Dang, Duc Anh, 2012. "On the sources of risk preferences in rural Vietnam," MPRA Paper 38738, University Library of Munich, Germany.
  5. Mueller, Valerie & Quisumbing, Agnes, 2010. "Short- and long-term effects of the 1998 Bangladesh flood on rural wages," IFPRI discussion papers 956, International Food Policy Research Institute (IFPRI).
  6. Cameron, Lisa A. & Shah, Manisha, 2012. "Risk-Taking Behavior in the Wake of Natural Disasters," IZA Discussion Papers 6756, Institute for the Study of Labor (IZA).
  7. Anh Duc Dang, 2012. "On the Sources of Risk Preferences in Rural Vietnam," ANU Working Papers in Economics and Econometrics 2012-593, Australian National University, College of Business and Economics, School of Economics.

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  1. Economic Logic blog

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