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Weathering an Unexpected Financial Shock: The Role of Cash Grants on Household Finance and Business Survival

Justin Gallagher, Daniel Hartley () and Shawn Rohlin ()

No WP-2019-10, Working Paper Series from Federal Reserve Bank of Chicago

Abstract: We estimate the causal effect of cash grants on household finance and business survival following a natural disaster. Disaster-affected individuals in high damage blocks with access to cash grants have 17% less credit card debt following the disaster than those without access to cash grants. Grants do not reduce negative financial outcomes, but do decrease migration. The grants play a role in mitigating the effects of the shock to businesses; resulting in 18% more establishments and 29% more employees post-disaster in disaster-affected neighborhoods where residents receive grants, relative to disaster-affected neighborhoods where they do not receive grants. These effects are concentrated among small non-manufacturing establishments that rely on local demand.

Keywords: Natural disasters; households finance; regional economic activity (search for similar items in EconPapers)
JEL-codes: D14 Q54 R11 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2019-10-28, Revised 2019-10-28
New Economics Papers: this item is included in nep-sbm and nep-ure
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DOI: 10.21033/wp-2019-10

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