Why Some Don’t Belong—The Distributional Effects of Natural Disasters

Nina Budina, Lixue Chen and Laura Nowzohour

No 2023/002, IMF Working Papers from International Monetary Fund

Abstract: When and how do natural disasters worsen within-country income inequality? We highlight the channels through which natural disasters may have distributional effects and empirically analyze when and which type of disasters affect inequality in advanced economies (AEs) and in emerging and developing economies (EMDEs). We find that in AEs inequality increases after severe disasters. We also find that inequality increases if severe disasters are associated with growth slowdowns or there are multiple disasters in a year in AEs and in EMDEs. Descriptive evidence for the US also suggests that adverse labor market effects of disasters are likely to fall on vulnerable groups.

Keywords: labor market effect; distributional effect; inequality effect; effects of disaster; projections estimate; Natural disasters; Income inequality; Income distribution; Labor markets; Sub-Saharan Africa; Caribbean (search for similar items in EconPapers)
Pages: 49
Date: 2023-01-06
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