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The Role of Transfer Payments in Mitigating Shocks: Evidence From the Impact of Hurricanes

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  • Deryugina, Tatyana

Abstract

Little is known about how aggregate economic shocks are mitigated by social safety nets. I use hurricanes as an exogenous shock to the economics of US counties and show that non-disaster government transfers, such as unemployment insurance and public medical spending, increase substantially in the decade after landfall. Indeed, I estimate that the net present value of the increase in non-disaster transfers is more than double that of direct disaster aid. Among the implications of these findings are that the fiscal costs of natural disasters are much larger than previously thought and that existing social safety net programs help to mitigate the effects of macroeconomic shocks.

Suggested Citation

  • Deryugina, Tatyana, 2011. "The Role of Transfer Payments in Mitigating Shocks: Evidence From the Impact of Hurricanes," MPRA Paper 53307, University Library of Munich, Germany, revised 08 Aug 2013.
  • Handle: RePEc:pra:mprapa:53307
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    1. repec:kap:sbusec:v:49:y:2017:i:4:d:10.1007_s11187-017-9859-5 is not listed on IDEAS
    2. Matthew Ranson & Lisa Tarquinio & Audrey Lew, 2016. "Modeling the Impact of Climate Change on Extreme Weather Losses," NCEE Working Paper Series 201602, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised May 2016.
    3. Kirchberger, Martina, 2017. "Natural disasters and labor markets," Journal of Development Economics, Elsevier, vol. 125(C), pages 40-58.
    4. Adriana Kocornik-Mina & Thomas K.J. McDermott & Guy Michaels & Ferdinand Rauch, 2015. "Flooded cities," GRI Working Papers 221, Grantham Research Institute on Climate Change and the Environment.
    5. Davlasheridze, Meri & Fisher-Vanden, Karen & Klaiber, H. Allen, 2013. "The Higher Order Impacts of Hurricane: Evidence from County Level Analysis," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150196, Agricultural and Applied Economics Association.
    6. Lazzaroni, Sara & van Bergeijk, Peter A.G., 2014. "Natural disasters' impact, factors of resilience and development: A meta-analysis of the macroeconomic literature," Ecological Economics, Elsevier, vol. 107(C), pages 333-346.
    7. Jianhong E. Mu & Yong Chen, 2016. "Impacts of large natural disasters on regional income," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 83(3), pages 1485-1503, September.
    8. Lynham, John & Noy, Ilan & Page, Jonathan, 2017. "The 1960 Tsunami in Hawaii: Long-Term Consequences of a Coastal Disaster," World Development, Elsevier, vol. 94(C), pages 106-118.
    9. Kousky, Carolyn, 2012. "Informing Climate Adaptation: A Review of the Economic Costs of Natural Disasters, Their Determinants, and Risk Reduction Options," Discussion Papers dp-12-28, Resources For the Future.
    10. Tatyana Deryugina & Solomon M. Hsiang, 2014. "Does the Environment Still Matter? Daily Temperature and Income in the United States," NBER Working Papers 20750, National Bureau of Economic Research, Inc.
    11. Meri Davlasheridze & Qin Fan, 2017. "Household Adjustments to Hurricane Katrina," The Review of Regional Studies, Southern Regional Science Association, vol. 47(1), pages 92-112, Winter.
    12. Martina Kirchberger, 2014. "Natural disasters and labour markets," CSAE Working Paper Series 2014-19, Centre for the Study of African Economies, University of Oxford.
    13. Martina Kirchberger, 2014. "Natural Disasters and Labour Markets," Economics Series Working Papers WPS/2014-19, University of Oxford, Department of Economics.
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    16. repec:spr:nathaz:v:89:y:2017:i:2:d:10.1007_s11069-017-2998-9 is not listed on IDEAS
    17. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2013. "What Do We Learn from the Weather? The New Climate-Economy Literature," NBER Working Papers 19578, National Bureau of Economic Research, Inc.
    18. Yilin Hou & Qing Miao & Michael Abrigo, 2016. "Measuring the Financial Shocks of Natural Disasters: A Panel Study of U.S. States," Center for Policy Research Working Papers 199, Center for Policy Research, Maxwell School, Syracuse University.

    More about this item

    Keywords

    Mitigation; Macroeconomic Shock; Transfer Payments;

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H8 - Public Economics - - Miscellaneous Issues
    • H84 - Public Economics - - Miscellaneous Issues - - - Disaster Aid
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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