Human Capital Investment After the Storm

71 Pages Posted: 19 May 2020 Last revised: 4 Apr 2022

See all articles by Emily Gallagher

Emily Gallagher

University of Colorado at Boulder - Department of Finance; Federal Reserve Banks - Federal Reserve Bank of St. Louis

Stephen B. Billings

University of Colorado - Boulder

Lowell Ricketts

Federal Reserve Banks - Federal Reserve Bank of St. Louis

Date Written: May 4, 2020

Abstract

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

Suggested Citation

Gallagher, Emily and Billings, Stephen B. and Ricketts, Lowell, Human Capital Investment After the Storm (May 4, 2020). Available at SSRN: https://ssrn.com/abstract=3592609 or http://dx.doi.org/10.2139/ssrn.3592609

Emily Gallagher (Contact Author)

University of Colorado at Boulder - Department of Finance ( email )

Campus Box 419
Boulder, CO 80309
United States

Federal Reserve Banks - Federal Reserve Bank of St. Louis ( email )

411 Locust St
Saint Louis, MO 63011
United States

Stephen B. Billings

University of Colorado - Boulder ( email )

Leeds School of Business
Koelbel Building
Boulder, CO US 80309
United States

Lowell Ricketts

Federal Reserve Banks - Federal Reserve Bank of St. Louis ( email )

411 Locust St
Saint Louis, MO 63011
United States

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