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Natural disasters, self-Insurance, and human capital investment: Evidence from Bangladesh, Ethiopia, and Malawi

Author

Listed:
  • Yamauchi, Futoshi
  • Yohannes, Yisehac
  • Quisumbing, Agnes R.
Abstract
"This paper uses panel data from Bangladesh, Ethiopia, and Malawi to examine the impacts of disasters on dynamic human capital production. Our empirical results show that accumulation of biological human capital prior to a disaster helps children maintain investments during the post-disaster period. Biological human capital formed in early childhood (for example, good long-term nutritional status) helps insure resilience to disasters by protecting schooling investments and outcomes, even though disasters have negative impacts on the actual investments (for example, by destroying schools). In Bangladesh, children with more biological human capital are less adversely affected by flood, and the rate of investment increases with the initial human capital stock during the post-disaster recovery process. In Ethiopia and Malawi, where droughts are relatively frequent, repeated drought exposure reduces schooling investments in some cases, with larger negative impacts seen among children who embody less biological human capital. Asset holdings prior to disaster (especially intellectual human capital stock in the household) also help maintain schooling investments to at least the same degree as the stock of human capital accumulated in the children prior to the disaster. Our results suggest that as the frequency of natural disasters increases due to global warming, the insurance value of investments in child nutrition will increase. Public investments in child nutrition therefore have the potential to effectively protect long-term human capital formation among children who are vulnerable to natural disasters." from authors' abstract

Suggested Citation

  • Yamauchi, Futoshi & Yohannes, Yisehac & Quisumbing, Agnes R., 2009. "Natural disasters, self-Insurance, and human capital investment: Evidence from Bangladesh, Ethiopia, and Malawi," IFPRI discussion papers 881, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:fpr:ifprid:881
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    References listed on IDEAS

    as
    1. Harold Alderman & John Hoddinott & Bill Kinsey, 2006. "Long term consequences of early childhood malnutrition," Oxford Economic Papers, Oxford University Press, vol. 58(3), pages 450-474, July.
    2. Noy, Ilan, 2009. "The macroeconomic consequences of disasters," Journal of Development Economics, Elsevier, vol. 88(2), pages 221-231, March.
    3. Futoshi Yamauchi, 2008. "Early Childhood Nutrition, Schooling, and Sibling Inequality in a Dynamic Context: Evidence from South Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 56(3), pages 657-682, April.
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    6. Cunha, Flavio & Heckman, James J. & Lochner, Lance, 2006. "Interpreting the Evidence on Life Cycle Skill Formation," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 1, chapter 12, pages 697-812, Elsevier.
    7. Behrman, Jere R. & Murphy, Alexis & Quisumbing, Agnes R. & Yount, Kathryn, 2009. "Are returns to mothers' human capital realized in the next generation?: The impact of mothers' intellectual human capital and long-run nutritional status on children's human capital in Guatemala," IFPRI discussion papers 850, International Food Policy Research Institute (IFPRI).
    8. Pitt, Mark M & Rosenzweig, Mark R, 1990. "Estimating the Intrahousehold Incidence of Illness: Child Health and Gender-Inequality in the Allocation of Time," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(4), pages 969-980, November.
    9. repec:bla:obuest:v:63:y:2001:i:4:p:409-36 is not listed on IDEAS
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. How to insure against natural disasters in the absence of insurance
      by Economic Logician in Economic Logic on 2009-05-19 01:15:00

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    Cited by:

    1. Tim Lohse & Julio R. Robledo & Ulrich Schmidt, 2012. "Self‐Insurance and Self‐Protection as Public Goods," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 79(1), pages 57-76, March.
    2. Dang, Duc Anh, 2012. "On the sources of risk preferences in rural Vietnam," MPRA Paper 38058, University Library of Munich, Germany.
    3. Lisa Cameron & Manisha Shah, 2015. "Risk-Taking Behavior in the Wake of Natural Disasters," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 484-515.
    4. Dang, Duc Anh, 2012. "On the sources of risk preferences in rural Vietnam," MPRA Paper 38738, University Library of Munich, Germany.
    5. Eva Deuchert & Christina Felfe, 2013. "The Tempest: Natural Disasters, Early Shocks and Children's Short- and Long-Run Development," CESifo Working Paper Series 4168, CESifo.
    6. Sawada, Yasuyuki & Takasaki, Yoshito, 2017. "Natural Disaster, Poverty, and Development: An Introduction," World Development, Elsevier, vol. 94(C), pages 2-15.
    7. Anh Duc Dang, 2012. "On the Sources of Risk Preferences in Rural Vietnam," ANU Working Papers in Economics and Econometrics 2012-593, Australian National University, College of Business and Economics, School of Economics.
    8. Mueller, Valerie & Quisumbing, Agnes, 2010. "Short- and long-term effects of the 1998 Bangladesh flood on rural wages," IFPRI discussion papers 956, International Food Policy Research Institute (IFPRI).

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    More about this item

    Keywords

    Disasters; Human capital; Nutrition; Schooling; Self-insurance; Poverty reduction; Social protection; Shocks; Asset dynamics; Education;
    All these keywords.

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