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Tag Archives: Natural Disasters

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

by Richard Lombardo


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

Duncan Thomas, Faculty Advisor
Michelle Connolly, Faculty Advisor

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

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

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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Evolution of Wealth and Consumption in the Aftermath of a Major Natural Disaster

By Ralph Lawton   

Natural disasters can have catastrophic personal and economic effects, particularly in low-resource settings. Major natural disasters are becoming more frequent, so rigorous understanding of their effects on long-term economic wellbeing is fundamentally important in order to mitigate their impacts on exposed populations. In this paper, I investigate the effects of the 2004 Indian Ocean tsunami on real consumption and assets at the individual level. I also examine the heterogeneity of those impacts, and the related effects on inequality. Taking individual-specific heterogeneity into account with fixed effects, I find individuals living in heavily damaged areas experience major declines in real consumption and assets, and do not recover in the long term. These results are strikingly different than results that do not consider price effects, as well as previously published macroeconomic results. I also find significant heterogeneity by age, education-level, pre-tsunami socioeconomic status, and whether an individual went into a refugee camp. The tsunami resulted in large, long-term declines in asset inequality, and a temporary increase in consumption inequality that returns to near pre-tsunami levels in the long run.

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Advisors: Professor Duncan Thomas, Professor Michelle Connolly | JEL Codes: D1, D15, H84

After the Storm Impacts of natural disasters in the United States at the state and county level

By Danjie Fang

Empirical research on the impact of natural disasters on economic growth has provided contradictory results and few studies have focused on the United States. In this thesis, I bridge the gap by examining the merits of existing claims on the relationship between natural disasters and growth at the states and county level in the U.S. I find that climatological and geophysical disasters have a small and negative impact on growth rates at the state level, but that this impact disappears over time. At the county level, I find that tornados have a slight but negative impact on per capita GDP levels and growth rates over a five year period across three states that experience this natural phenomenon. Controlling for FEMA aid, I find that there may be upward omitted variable bias in regressions that do not include the amount of aid as a variable. I find evidence that FEMA aid has a small but positive impact on growth and per capita GDP levels at both the county and state level.

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Advisor: Christopher Timmins, Michelle Connolly | JEL Codes: O11, O40, Q58 | Tagged: Aid, County, FEMA, Natural Disasters, State, United States


Undergraduate Program Assistant
Matthew Eggleston

Director of the Honors Program
Michelle P. Connolly