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The tempest: Using a natural disaster to evaluate the link between wealth and child development

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  • Felfe, Christina

    ()

  • Deuchert. Eva

    ()

Abstract

How does family wealth affect children's development in the short- and long-run? We address this question by exploiting a shock occurred to family’s real estate, i.e. housing damages caused by a super typhoon. Our identification strategy is based on a comparison of children, who all lived in the same local area and thus were confronted with the same macro-economic shock, but only some experienced housing damages. We present evidence in favor of housing damages being essentially a severe wealth shock, with no effects on other observable channels which might directly harm children’s development. The shock results in a decline of educa-tional investments, but not of health-related investments. We observe a deterioration of chil-dren’s educational achievements in the short-run and even more pronounced in the long-run. Our findings are mainly driven by children whose families are at the bottom of the wealth distribution or lack the support of a strong family network.

Suggested Citation

  • Felfe, Christina & Deuchert. Eva, 2011. "The tempest: Using a natural disaster to evaluate the link between wealth and child development," Economics Working Paper Series 1146, University of St. Gallen, School of Economics and Political Science.
  • Handle: RePEc:usg:econwp:2011:46
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    File URL: http://ux-tauri.unisg.ch/RePEc/usg/econwp/EWP-1146.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Child development; wealth effects; natural disaster;

    JEL classification:

    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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