Poverty and inequality impact of natural disasters: Myanmar, 2005 to 2010

Peter Warr and Lwin Lwin Aung

Departmental Working Papers from The Australian National University, Arndt-Corden Department of Economics

Abstract: According to national household survey data for Myanmar, spanning the five-year interval 2005 to 2010, average real household consumption expenditures remained stagnant, but measured poverty incidence and inequality both declined significantly. The distribution of the economic pie shifted in favor of the poor while the overall size of the pie barely changed. This paper examines the possibility that the hitherto unexplained reduction in measured inequality was caused, at least partly, by a natural disaster, Tropical Cyclone Nargis, which devastated parts of Myanmar in May 2008. This hypothesis is supported by a recent historical study which argues that, globally, large reductions in inequality normally occur only through either man-made or natural disasters. The paper develops a method, based on regression analysis of household level data, for isolating the impact of an exogenous natural event like a cyclone. The estimated regression model is used to simulate a counterfactual distribution of expenditures in which, hypothetically, the cyclone did not occur. The estimated impact of the cyclone is the difference between the observed outcome, in which the cyclone happened, and this simulated, counterfactual outcome in which it did not. The findings indicate that the cyclone reduced inequality between regions of Myanmar, because the negatively affected regions were on average better-off than the unaffected regions, both before and after the cyclone. Within the affected regions the negative impact of the cyclone was largest in absolute terms among richer households, but as a proportion of household expenditures, these negative effects were larger among the poorer households. The cyclone therefore increased economic inequality within the affected regions. Overall measured inequality declined because the between-region reduction exceeded the within-region increase. The hypothesis that the cyclone caused the reduction in inequality is rejected.

Keywords: Expenditure distribution; inequality; decomposition analysis; regression-based decompositions; Myanmar (search for similar items in EconPapers)
JEL-codes: C12 C51 D31 D63 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2018
New Economics Papers: this item is included in nep-dev and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://acde.crawford.anu.edu.au/sites/default/fil ... 7/final_2018_-15.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pas:papers:2018-15

Access Statistics for this paper

More papers in Departmental Working Papers from The Australian National University, Arndt-Corden Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Prema-chandra Athukorala ().