Human Capital Investment After the Storm
71 Pages Posted: 19 May 2020 Last revised: 4 Apr 2022
Date Written: May 4, 2020
How does household exposure to a major natural disaster affect higher education investments? Using variation in flooding from Hurricane Harvey (2017), we find that undergraduate-aged adults from flooded blocks in Houston are 7% less likely than counterparts to have student loans after Harvey, with larger effects in areas with more potential first-generation students. We find a similar relative decline in enrollment at more exposed Texas colleges and a shift towards college majors that have higher expected earnings. Our results highlight a decrease in the quantity but an increase in the intensity of investments in human capital after the storm.
Keywords: student debt, household finance, financial constraint, wealth shock, natural disaster, FEMA, higher education
JEL Classification: G51, R00, Q54, I22
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