The Tempest: Natural Disasters, Early Shocks and Children's Short- and Long-Run Development

Abstract

Economic theory predicts that adverse shocks during early childhood have detrimental short- and long-run consequences for children’s development. We examine this hypothesis by analyzing the short-and long-run effects on children’s health and education of a specific shock: housing damages caused by a super typhoon. Our results reveal negative effects on children’s education - not, however, on health. The effects on children’s education aggravate over time. Empirical evidence indicates that the main underlying channel is a shock on families’ wealth.

Keywords: child development, natural disaster, wealth shock

JEL Classification: I140, I240, Q540