[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/eee/ecolec/v209y2023ics0921800923000964.html
   My bibliography  Save this article

The impact of tropical cyclones on income inequality in the U.S.: An empirical analysis

Author

Listed:
  • Kulanthaivelu, Eric
Abstract
Despite a growing number of studies on the effects of tropical cyclones on economic growth, not much is known about their effects on income inequality. This paper addresses this question by using a panel data set of U.S. counties affected during the period 2010–2019. It exploits geophysical information to construct the disaster intensity predictor, and shows that storm shocks significantly decrease local income inequality levels in the year that they occur. A close study of the composition effects reveals several interesting patterns. First, the immediate impact is driven by the two lowest quintiles and the top quintile of the income distribution. Second, the beneficial effects on income inequality are stabilised in the short-run and the frequency of events is a crucial parameter to consider as repeatedly exposed counties exhibit larger responses after a cyclone strike than their rarely exposed counterparts. Finally, among others, this study stresses the importance of social safety nets in counteracting tropical cyclones’ adverse income distributional effects.

Suggested Citation

  • Kulanthaivelu, Eric, 2023. "The impact of tropical cyclones on income inequality in the U.S.: An empirical analysis," Ecological Economics, Elsevier, vol. 209(C).
    • Handle: RePEc:eee:ecolec:v:209:y:2023:i:c:s0921800923000964
    DOI: 10.1016/j.ecolecon.2023.107833
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0921800923000964
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ecolecon.2023.107833?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jeffrey A. Groen & Mark J. Kutzbach & Anne E. Polivka, 2020. "Storms and Jobs: The Effect of Hurricanes on Individuals’ Employment and Earnings over the Long Term," Journal of Labor Economics, University of Chicago Press, vol. 38(3), pages 653-685.
    2. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    3. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, vol. 49(1), pages 3-71, March.
    4. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
    5. Kerry Emanuel, 2005. "Increasing destructiveness of tropical cyclones over the past 30 years," Nature, Nature, vol. 436(7051), pages 686-688, August.
    6. Anh Tuan Bui & Mardi Dungey & Cuong Viet Nguyen & Thu Phuong Pham, 2014. "The impact of natural disasters on household income, expenditure, poverty and inequality: evidence from Vietnam," Applied Economics, Taylor & Francis Journals, vol. 46(15), pages 1751-1766, May.
    7. Noy, Ilan, 2009. "The macroeconomic consequences of disasters," Journal of Development Economics, Elsevier, vol. 88(2), pages 221-231, March.
    8. Eiji Yamamura, 2010. "Effects of Interactions among Social Capital, Income and Learning from Experiences of Natural Disasters: A Case Study from Japan," Regional Studies, Taylor & Francis Journals, vol. 44(8), pages 1019-1032.
    9. Coffman, Makena & Noy, Ilan, 2012. "Hurricane Iniki: measuring the long-term economic impact of a natural disaster using synthetic control," Environment and Development Economics, Cambridge University Press, vol. 17(2), pages 187-205, April.
    10. Eric Strobl, 2011. "The Economic Growth Impact of Hurricanes: Evidence from U.S. Coastal Counties," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 575-589, May.
    11. Sven Kunze, 2021. "Unraveling the Effects of Tropical Cyclones on Economic Sectors Worldwide: Direct and Indirect Impacts," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(4), pages 545-569, April.
    12. Gabriel Fuentes Cordoba & Niklas Uliczka, 2021. "The Impact of Hurricane Katrina on Income Inequality: A Synthetic Control Analysis," TUPD Discussion Papers 6, Graduate School of Economics and Management, Tohoku University.
    13. Simon Kuznets & Elizabeth Jenks, 1953. "Shares of Upper Income Groups in Income and Savings (1953)," NBER Books, National Bureau of Economic Research, Inc, number kuzn53-1.
    14. Pleninger, Regina, 2022. "Impact of natural disasters on the income distribution," World Development, Elsevier, vol. 157(C).
    15. Keerthiratne, Subhani & Tol, Richard S.J., 2018. "Impact of natural disasters on income inequality in Sri Lanka," World Development, Elsevier, vol. 105(C), pages 217-230.
    16. Holtz-Eakin, Douglas & Newey, Whitney & Rosen, Harvey S, 1988. "Estimating Vector Autoregressions with Panel Data," Econometrica, Econometric Society, vol. 56(6), pages 1371-1395, November.
    17. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    18. Simon Kuznets & Elizabeth Jenks, 1953. "Shares of Upper Income Groups in Savings," NBER Chapters, in: Shares of Upper Income Groups in Income and Savings (1953), pages 171-218, National Bureau of Economic Research, Inc.
    19. Jeffrey A. Groen & Mark J. Kutzbach & Anne E. Polivka, 2020. "Storms and Jobs: The Effect of Hurricanes on Individuals’ Employment and Earnings over the Long Term," Journal of Labor Economics, University of Chicago Press, vol. 38(3), pages 653-685.
    20. David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, February.
    21. Tatyana Deryugina, 2017. "The Fiscal Cost of Hurricanes: Disaster Aid versus Social Insurance," American Economic Journal: Economic Policy, American Economic Association, vol. 9(3), pages 168-198, August.
    22. Hideki Toya & Mark Skidmore, 2014. "Do Natural Disasters Enhance Societal Trust?," Kyklos, Wiley Blackwell, vol. 67(2), pages 255-279, May.
    23. Schumacher, Ingmar & Strobl, Eric, 2011. "Economic development and losses due to natural disasters: The role of hazard exposure," Ecological Economics, Elsevier, vol. 72(C), pages 97-105.
    24. Eiji Yamamura, 2014. "Impact of natural disaster on public sector corruption," Public Choice, Springer, vol. 161(3), pages 385-405, December.
    25. Felbermayr, Gabriel & Gröschl, Jasmin, 2014. "Naturally negative: The growth effects of natural disasters," Journal of Development Economics, Elsevier, vol. 111(C), pages 92-106.
    26. Mark Skidmore & Hideki Toya, 2002. "Do Natural Disasters Promote Long-Run Growth?," Economic Inquiry, Western Economic Association International, vol. 40(4), pages 664-687, October.
    27. Krichene, H. & Geiger, T. & Frieler, K. & Willner, S.N. & Sauer, I. & Otto, C., 2021. "Long-term impacts of tropical cyclones and fluvial floods on economic growth – Empirical evidence on transmission channels at different levels of development," World Development, Elsevier, vol. 144(C).
    28. Alice Fothergill & Lori Peek, 2004. "Poverty and Disasters in the United States: A Review of Recent Sociological Findings," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 32(1), pages 89-110, May.
    29. Azreen Karim & Ilan Noy, 2016. "Poverty And Natural Disasters — A Qualitative Survey Of The Empirical Literature," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(01), pages 1-36, March.
    30. Feng, Shuaizhang & Lu, Jingliang & Nolen, Patrick & Wang, Lei, 2016. "The effect of the Wenchuan earthquake and government aid on rural households," IFPRI book chapters, in: Chen, Kevin Z. & Zhang, Qiang & Hsu, Claire (ed.), Earthquake lessons from China: Coping and rebuilding strategies, chapter 2, pages 11-34, International Food Policy Research Institute (IFPRI).
    31. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-1426, November.
    32. William D. Nordhaus, 2006. "The Economics of Hurricanes in the United States," NBER Working Papers 12813, National Bureau of Economic Research, Inc.
    33. Matthew E. Kahn, 2005. "The Death Toll from Natural Disasters: The Role of Income, Geography, and Institutions," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 271-284, May.
    34. Eiji Yamamura, 2015. "The Impact of Natural Disasters on Income Inequality: Analysis using Panel Data during the Period 1970 to 2004," International Economic Journal, Taylor & Francis Journals, vol. 29(3), pages 359-374, September.
    35. Kousky, Carolyn, 2014. "Informing climate adaptation: A review of the economic costs of natural disasters," Energy Economics, Elsevier, vol. 46(C), pages 576-592.
    36. Yanos Zylberberg, 2010. "Do tropical typhoons smash community ties? Theory and Evidence from Vietnam," Working Papers 11, Development and Policies Research Center (DEPOCEN), Vietnam.
    37. Abu Nasar Mohammad Abdullah & Kerstin Katharina Zander & Bronwyn Myers & Natasha Stacey & Stephen Thomas Garnett, 2016. "A short-term decrease in household income inequality in the Sundarbans, Bangladesh, following Cyclone Aila," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 83(2), pages 1103-1123, September.
    38. Ariel R. Belasen & Solomon W. Polachek, 2009. "How Disasters Affect Local Labor Markets: The Effects of Hurricanes in Florida," Journal of Human Resources, University of Wisconsin Press, vol. 44(1).
    39. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    40. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
    41. Yanos Zylberberg, 2010. "Do tropical typhoons smash community ties? Theory and evidence from Vietnam," Working Papers halshs-00564941, HAL.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Weiwei Wang & Yifan Zhao, 2023. "Impact of Natural Disasters on Household Income and Expenditure Inequality in China," Sustainability, MDPI, vol. 15(18), pages 1-15, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Keerthiratne, Subhani & Tol, Richard S.J., 2018. "Impact of natural disasters on income inequality in Sri Lanka," World Development, Elsevier, vol. 105(C), pages 217-230.
    2. Felbermayr, Gabriel & Gröschl, Jasmin, 2014. "Naturally negative: The growth effects of natural disasters," Journal of Development Economics, Elsevier, vol. 111(C), pages 92-106.
    3. F. Zhou & W.J.W. Botzen, 2017. "The Impact of Natural Disasters on Firm Growth in Vietnam:: Interaction with Financial Constraints," Working Papers 17-20, Utrecht School of Economics.
    4. Meri Davlasheridze & Pinar C. Geylani, 2017. "Small Business vulnerability to floods and the effects of disaster loans," Small Business Economics, Springer, vol. 49(4), pages 865-888, December.
    5. Pleninger, Regina, 2022. "Impact of natural disasters on the income distribution," World Development, Elsevier, vol. 157(C).
    6. Pelli, Martino & Tschopp, Jeanne & Bezmaternykh, Natalia & Eklou, Kodjovi M., 2023. "In the eye of the storm: Firms and capital destruction in India," Journal of Urban Economics, Elsevier, vol. 134(C).
    7. Yue Dou & Muhammad Shahbaz & Kangyin Dong & Xiucheng Dong, 2022. "How natural disasters affect carbon emissions: the global case," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 113(3), pages 1875-1901, September.
    8. Vikrant Panwar & Subir Sen, 2019. "Economic Impact of Natural Disasters: An Empirical Re-examination," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 13(1), pages 109-139, February.
    9. Mateo Zokalj, 2016. "The impact of population aging on public finance in the European Union," Financial Theory and Practice, Institute of Public Finance, vol. 40(4), pages 383-412.
    10. Michel Dumont, 2015. "Working Paper 05-15 - Evaluation of federal tax incentives for private R&D in Belgium: An update," Working Papers 1505, Federal Planning Bureau, Belgium.
    11. Scott, K. Rebecca, 2011. "Demand and Price Volatility: Rational Habits in International Gasoline Demand," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt2q87432b, Department of Agricultural & Resource Economics, UC Berkeley.
    12. Lee, Chien-Chiang & Wang, Chih-Wei & Ho, Shan-Ju & Wu, Ting-Pin, 2021. "The impact of natural disaster on energy consumption: International evidence," Energy Economics, Elsevier, vol. 97(C).
    13. Klomp, Jeroen & Hoogezand, Barry, 2018. "Natural disasters and agricultural protection: A panel data analysis," World Development, Elsevier, vol. 104(C), pages 404-417.
    14. Loayza, Norman V. & Olaberría, Eduardo & Rigolini, Jamele & Christiaensen, Luc, 2012. "Natural Disasters and Growth: Going Beyond the Averages," World Development, Elsevier, vol. 40(7), pages 1317-1336.
    15. Sigmund, Michael & Ferstl, Robert, 2021. "Panel vector autoregression in R with the package panelvar," The Quarterly Review of Economics and Finance, Elsevier, vol. 80(C), pages 693-720.
    16. Mohcine Bakhat & José M. Labeaga & Xavier Labandeira & Xiral Lñpez, 2013. "Economic Crisis and Elasticities of Car Fuels: Evidence for Spain," Working Papers fa15-2013, Economics for Energy.
    17. Nguyen Thi Tuong Anh & Hung Quang Doan & Tuan Anh Bui & Nam Hoang Vu & Duong Thuy Thanh Le, 2022. "A Revisit of Motives for Chinese Outward Foreign Direct Investment: The Role of the Institution in Host Countries," SAGE Open, , vol. 12(4), pages 21582440221, December.
    18. Dolton, Peter & Bondibene, Chiara Rosazza & Stops, Michael, 2015. "Identifying the employment effect of invoking and changing the minimum wage: A spatial analysis of the UK," Labour Economics, Elsevier, vol. 37(C), pages 54-76.
    19. Weiwei Wang & Yifan Zhao, 2023. "Impact of Natural Disasters on Household Income and Expenditure Inequality in China," Sustainability, MDPI, vol. 15(18), pages 1-15, September.
    20. Barattieri, Alessandro & Borda, Patrice & Brugnoli, Alberto & Pelli, Martino & Tschopp, Jeanne, 2023. "The short-run, dynamic employment effects of natural disasters: New insights from Puerto Rico," Ecological Economics, Elsevier, vol. 205(C).

    More about this item

    Keywords

    Natural disasters; Tropical cyclones; Income inequality; Economic impacts; Environmental risk;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:209:y:2023:i:c:s0921800923000964. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolecon .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.