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Category Archives: Q54

Reconstruction following Destruction: Entrepreneurship in the Aftermath of a Natural Disaster

by Richard Lombardo

Abstract

Entrepreneurship is thought to be the engine of growth in many developing countries. There is, however,
a paucity of evidence on the role that entrepreneurship plays in rebuilding economic livelihoods both in
the short and longer-term in the aftermath of a large-scale shock. This is an important gap in the literature
given the increasing frequency and severity of shocks across the globe. This paper contributes to filling that
gap by investigating the evolution of entrepreneurial success following the 2004 Indian Ocean tsunami, a
large-scale and unexpected shock. Using longitudinal survey data, the Study of the Tsunami Aftermath and
Recovery (STAR), I find large declines in business ownership, profits, and capital for those most exposed
to the tsunami that persisted through 10 years following the tsunami. These estimates can be given a causal
interpretation under the plausible assumption that exposure to the tsunami can be treated as exogenous after
taking into account individual-specific unobserved heterogeneity with fixed effects, including pre-tsunami
geographical features that drove exposure. Individuals living in rural areas and individuals with the least
resources pre-tsunami fared the worst in terms of developing new businesses. However, the massive Build
Back Better reconstruction program promoted entrepreneurship. Receipt of housing aid as part of that
program is linked to an increase in the development of non-agricultural businesses that spurred gains in real
profits.

Duncan Thomas, Faculty Advisor
Michelle Connolly, Faculty Advisor

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JEL classification: D1; H84; L26; Q54

Short and Long-Term Impacts of a Large-Scale Natural Disaster on Individual Labor Outcomes: Evidence from the 2004 Indian Ocean Tsunami

By Tony sun

Abstract
Natural disasters are often highly disruptive to the livelihoods of impacted populations. This paper investigates the effects of the 2004 Indian Ocean tsunami on male wages and labor supply from its immediate aftermath into the long run. Using fixed effects models that account for individual-specific heterogeneity, I find evidence of significant real wage declines for workers from heavily damaged areas that persist beyond the short-term. This long-term wage effect contrasts with previous literature, particularly in the context of relatively less severe disasters. Male workers also increased their hours-of-work following the tsunami, which suggests reliance on labor markets to smooth income losses and shifted their labor towards less disrupted industries. Additionally, I document the heterogeneity of tsunami impact on wages and hours-of-work by birth cohort and education, as well as by industry and sector of employment.

Professor Duncan Thomas, Faculty Advisor
Professor Michelle P. Connolly, Honors Seminar Instructor

JEL classification: J2; J21; J30; O10; Q54

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A perfect storm: The effect of natural disasters on child health

By Cheyenne Danielle Quijano

Abstract
Typhoons and their accompanying flooding have destructive effects, including an
increase in the risk of waterborne disease in children. Using a spatial regression discontinuity
design, I explore the immediate to short-term effects of flooding as a result
of Typhoon Labuyo on the incidence of diarrhea and acute respiratory infection in the
Philippines by comparing children living in a flooded barangay (town) to children living
just outside of the flooded area. I build on the existing literature by accounting for
both incidence and intensity of the typhoon’s flooding in my model. I construct this
new flooding measure using programming techniques and ArcGIS by manipulating data
collected by the University of Maryland’s Global Flood Monitoring System. This data
as well as health data from the 2013 Philippines National Demographic Health Surveys
were collected the day after Typhoon Labuyo left the Philippines, providing a unique
opportunity to explore the immediate impact of the typhoon on child health. Most of
my results are insignificant, but subgroup analyses show that the effect of flooding on
waterborne disease incidence is less impactful in the immediate term following a flood
and more impactful in the medium-term. This is important, because understanding
the detrimental health effects of flooding is of utmost importance, especially because
climate change will only increase the frequency and intensity of natural disasters.

Professor Erica M. Field, Faculty Advisor
Professor Michelle P. Connolly, Faculty Advisor

JEL classification: I150, O120, O130, Q540

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Global Warming and Obesity: The Effect of Ambient Temperature on BMI

By Aakash Jain

Previous research has shown that ambient temperature affects human metabolism and behavior. Inspired by these findings, this study examines the effect of lagged annual temperatures in the United States on average reported BMI. The results indicate that higher temperatures in the future will lead to increases in average BMI. A conservative estimate suggests that a 1 °C increase in temperature sustained for 10 years would result in a 0.15 unit increase in average BMI and an additional $15.5 billion in annual health care expenditure.

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Advisor: Billy Pizer | JEL Codes: Q5, Q54, I1, I10

Unitization of Oil Reserves in Alaska and the Supply Elasticity of a Common Pool Resource

By Emily Bailey

Unitization, a common but not omnipresent policy that is lauded in both the economics and environmental world for its efficiency, attempts to solve the “tragedy of the commons” common pool failure of oil production by creating a system in which all those with interests in one reserve produce jointly and split profits accordingly. This paper empirically demonstrates what other researchers have hypothesized – that unitization reduces the elasticity of supply with respect to price. It then extrapolates to potential impacts this policy could have on the environment at large by forecasting a future production path based on the model from the previous section. Finally, it demonstrates how unitization could slow the accumulation of greenhouse gases in the atmosphere.

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Advisor: Christopher Timmins | JEL Codes: Q38, Q48, Q54 | Tagged: Alaska, Climate Change, Oil, Oil Production, Oil Reserves, Unitization

Questions?

Undergraduate Program Assistant
Matthew Eggleston
dus_asst@econ.duke.edu

Director of the Honors Program
Michelle P. Connolly
michelle.connolly@duke.edu