Title page
Contents
Abstract 2
Executive Summary 6
Introduction 7
Stylized Facts of Natural Disasters and Inequality 9
Channels of Distributional Effects: Literature Review 13
A. Macroeconomic Channels 13
B. Policy Responses as Adaptation Channels 14
C. Macroeconomic Vulnerabilities as Intensification Channels 15
D. Socioeconomic Vulnerabilities as Intensification Channels 15
E. Complexities 15
The Distributional Impact of Natural Disasters 16
A. Empirical Strategy: Local Projections 17
B. Constructing the Severe Disaster Dummy 18
C. Econometric Results 22
D. The United States: Local Effects of Major Natural Disasters 31
Conclusions 36
Appendix I. Database for Natural Disasters 38
Appendix II. Grid Search Exercise 39
Appendix III. The U.S. States Event Analysis 42
References 45
Table 1. LHS: Aggregate Cutoffs; RHS: Event-level Cutoffs 20
Figure 1. Natural Disasters Over Time and Across Countries (1990-2019) 9
Figure 2. Incidence of Natural Disasters by Types and Country Groups (1990-2019) 9
Figure 3. Geographical Distribution of Natural Disasters (1990-2019) 10
Figure 4. Average Social and Direct Economic Cost of Disasters 11
Figure 5. Geographical Distribution of Severe Natural Disasters 12
Figure 6. Severe Disasters, Economic Growth, Poverty, and Inequality 12
Figure 7. Severe Natural Disasters: Channels for Distributional Effects 16
Figure 8. Grid Search Exercises: Summary and Main Questions 17
Figure 9. Skewed Social Costs and Economic Damages of Disasters 19
Figure 10. Local Projections Estimates of Inequality Effects of Severe Disasters in Advanced Economies 23
Figure 11. Local Projections Estimates: Severe Disasters with Growth Slowdown 24
Figure 12. Local Projections Estimates: Repeated Severe Disasters 26
Figure 13. Local Projections Estimates: By Disaster Types 27
Figure 14. Local Projections Estimates: Grid Search by Severe Disaster Definition, Severity (Treatment Group) Cutoff, and Control Group Cutoff 29
Figure 15. Local Projections Estimates: Grid Search, by Disaster Type, Severe Disaster Definition, Severity (Treatment Group) Cutoff, and Control Group Cutoff 30
Boxes
Box 1. Differences Across the Two Approaches: An Illustrative Example 21
Box 2. Heterogeneous Labor Market Effects of Natural Disasters in the United States 33
Box Tables
Table 1.1. Top-10 Countries Selected into the Treatment Group 21
Table 1.2. Aggregate Approach: Country-years with the Highest Frequency of Disasters 22
Table 1.3. Event-based Approach: Country-years with the Highest Frequency of Severe Disasters 22
Box Figures
Figure 2.1. Heterogenous Labor Market Effects of Major Natural Disasters 34
Appendix II. Grid Search Exercise 40
Table 1. Aggregated Approach 40
Table 2. Event-level Approach 41
Table 1. U.S. Event study Aggregated Variables 42
Table 2. United States: Major Disasters Over 1990-2019 (Top 5 natural disasters in the United States by damages or human costs) 44