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Benefit in the wake of disaster: Long-run effects of earthquakes on welfare in rural Indonesia

Listed author(s):
  • Jérémie Gignoux

    (PSE - Paris School of Economics, PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC))

  • Marta Menéndez

    (PSE - Paris School of Economics, DIAL - Développement, institutions et analyses de long terme, UP9 - Université Paris 9, Dauphine - Université Paris-Dauphine)

We examine the long-term effects on individual economic outcomes of a set of earthquakes – numerous, large, but mostly not extreme – that occurred in rural Indonesia since 1985. Using longitudinal individual-level data from large-scale household surveys, together with precise measures of local ground tremors obtained from a US Geological Survey database, we identify the effects of earthquakes, exploiting the quasi-random spatial and temporal nature of their distribution. Affected individuals experience short-term economic losses but recover in the medium run (after 2–5 years), and even exhibit income and welfare gains in the long term (6–12 years). The stocks of productive assets, notably in farms, get reconstituted and public infrastructures are improved, seemingly partly through external aid, allowing productivity to recover. These findings tend to discount the presence of poverty traps and exhibit the potential long-term benefits from well-designed post-disaster interventions in contexts where disasters primarily affect physical assets.

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Paper provided by HAL in its series Post-Print with number halshs-01245544.

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Length:
Date of creation: Jan 2016
Publication status: Published in Journal of Development Economics, Elsevier, 2016, 118, pp.26-44. <10.1016/j.jdeveco.2015.08.004>
Handle: RePEc:hal:journl:halshs-01245544
DOI: 10.1016/j.jdeveco.2015.08.004
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01245544
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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