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Long-term economic impact of disasters: Evidence from multiple earthquakes in China

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  • Huang, Lulu
  • Liu, Qiannan
  • Tang, Yugang

Abstract

This paper examines the short-term and long-term economic impacts of relative-ly small but more frequent earthquakes in China. Using a difference-in-differences approach based on prefecture-level city panel data, combined with a unique data set on seismic events in China, we find that both moderate and strong earthquakes significantly decrease affected prefectures’ GDP per capita in the long run. These effects vary depending on the level of local government fiscal autonomy, social capital intensity, and infrastructure development. We also find that three mechanisms contribute to long-term negative effects: the household savings rate, fixed asset investment, and innovation. Our results provide new insights for policymakers to address relatively small disasters, which can have a significant impact on the local economy in the long run.

Suggested Citation

  • Huang, Lulu & Liu, Qiannan & Tang, Yugang, 2024. "Long-term economic impact of disasters: Evidence from multiple earthquakes in China," World Development, Elsevier, vol. 174(C).
  • Handle: RePEc:eee:wdevel:v:174:y:2024:i:c:s0305750x23002644
    DOI: 10.1016/j.worlddev.2023.106446
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    More about this item

    Keywords

    Moderate and strong earthquakes; GDP; Transmission channels;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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