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Impact of Natural Disasters on the Income Distribution

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Abstract

During the last decades, the United States experienced an increase in the number of natural disasters as well as 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 natural disasters primarily affect middle incomes, thereby leaving income inequality levels mostly unchanged. In addition, the paper examines potential channels that intensify or mitigate the effects, such as social security or the severity of natural disasters. The findings show that social security, assistance programs and migration are important adaptation tools that reduce the effects of natural disasters. In contrast, the occurrence of multiple and severe disasters aggravate the effects.

Suggested Citation

  • Regina Pleninger, 2020. "Impact of Natural Disasters on the Income Distribution," KOF Working papers 20-474, KOF Swiss Economic Institute, ETH Zurich.
    • Handle: RePEc:kof:wpskof:20-474
    DOI: 10.3929/ethz-b-000404238
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    Cited by:

    1. Pan, Changchun & Huang, Yuzhe & Jin, Long, 2024. "Natural disasters and corporate tax burden: Evidence from chinese energy sector," Energy Economics, Elsevier, vol. 130(C).
    2. Weiwei Wang & Yifan Zhao, 2023. "Impact of Natural Disasters on Household Income and Expenditure Inequality in China," Sustainability, MDPI, vol. 15(18), pages 1-15, September.
    3. Hai‐Anh H. Dang & Stephane Hallegatte & Trong‐Anh Trinh, 2024. "Does global warming worsen poverty and inequality? An updated review," Journal of Economic Surveys, Wiley Blackwell, vol. 38(5), pages 1873-1905, December.
    4. Wagner, Patrick, 2025. "The hole dug deeper: Flash floods, income disparities, and labor informality in Brazil," Ecological Economics, Elsevier, vol. 237(C).
    5. 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.
    6. Dong, Kangyin & Zhao, Congyu & Nepal, Rabindra & Zander, Kerstin K., 2025. "Are natural disasters stumbling blocks to carbon inequality mitigation? A global perspective," Ecological Economics, Elsevier, vol. 227(C).
    7. Dr. Kangyin Dong & Congyu Zhao & Xiucheng Dong, 2024. "From Hell To Heaven: How Climate Risks Hurt The Poor And Climate Finance Heals Them," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 27(4), pages 603-630, December.
    8. Sarah Gust, 2024. "(Not) Going to School in Times of Climate Change: Natural Disasters and Student Achievement," ifo Working Paper Series 413, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    9. 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).
    10. Eugene Adjei & Jingfang Zhang & Wendiam Sawadgo & Wenying Li, 2024. "Nonlinear effects of conservation reserve program rental rates on land enrollment under varying crop price regimes," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 46(3), pages 1038-1064, September.
    11. Ahmad Zia Wahdat & Samuel Polzin, 2025. "Of Storms and Fires: Understanding Heterogenous Relationship of Food Insufficiency and Disaster Displacement in the United States," Economics of Disasters and Climate Change, Springer, vol. 9(2), pages 375-398, July.
    12. Belloc, Ignacio, 2024. "Family house prices in the US: Convergence clubs by county (1975-2022)," MPRA Paper 121487, University Library of Munich, Germany.
    13. Llerena Pinto, Maria Cristhina & Mirzabaev, Alisher & Qaim, Matin, 2025. "Effects of recurrent rainfall shocks on poverty and income distribution in rural Ecuador," World Development, Elsevier, vol. 195(C).
    14. Frost, Margaret H. & Kim, SangEun & Scartascini, Carlos & Zamora, Paula & Zechmeister, Elizabeth J., 2025. "Disaster and political trust: Evidence from the 2017 Mexico city earthquake," World Development, Elsevier, vol. 189(C).
    15. Qiao, ChengZhi & Chen, Shan, 2025. "Digital transformation, management efficiency and intra-firm common prosperity," International Review of Economics & Finance, Elsevier, vol. 98(C).
    16. Kulanthaivelu, Eric, 2023. "The impact of tropical cyclones on income inequality in the U.S.: An empirical analysis," Ecological Economics, Elsevier, vol. 209(C).

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    Keywords

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    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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