Estimating Returns to Capital and Ability: Evidence from a Natural Experiment

32 Pages Posted: 11 Aug 2014 Last revised: 29 Mar 2017

See all articles by Po Yin Wong

Po Yin Wong

Hong Kong Monetary Authority

Date Written: February 25, 2017

Abstract

This paper estimates economic returns to physical capital and inherent ability among Indonesian fishermen using a natural experiment. By exploiting the quasi-random variation in the length of fishing boats generated by an aid program among survivors of the 2004 Indian Ocean tsunami, it is found that the relative contribution of inherent ability and physical capital in explaining long run productivity vary over time. Indonesian fishermen who were relatively more productive before the disaster retain their productive edge ex-post, controlling for the receipt and quality of aid, as well as fishing conditions. Returns to innate ability, measured by ex-ante productivity, become more important over time; while returns to physical capital become less important.

Keywords: aid, natural hazards, productivity, Indonesia

JEL Classification: D24, J24, Q54, H84, O12

Suggested Citation

Wong, Po Yin, Estimating Returns to Capital and Ability: Evidence from a Natural Experiment (February 25, 2017). Available at SSRN: https://ssrn.com/abstract=2478278 or http://dx.doi.org/10.2139/ssrn.2478278

Po Yin Wong (Contact Author)

Hong Kong Monetary Authority ( email )

Hong Kong

Register to save articles to
your library

Register

Paper statistics

Downloads
39
Abstract Views
472
PlumX Metrics