The impact of natural disasters on welfare : evidence from the Chilean earthquake

Abstract

In February 2010, Chile was hit by an earthquake, which was followed by a tsunami. It is considered as the sixth strongest earthquake ever measured. In this paper, I exploit the exogenous exposure of individuals to this geological event to evaluate the short term effects of such a negative shock on children’s and adult’s welfare. Findings, together, point towards natural disasters having negative consequences on welfare and coincide with those carried out in previous studies. While I find no significant effect of the earthquake on school attendance, I find a negative impact on health conditions for children exposed to the natural disaster in comparison with a group of children not exposed to the natural disaster. Besides, labour force participation decreased among affected children. I also find that adults exposed to the shock were more likely to suffer from health problems. This result is confirmed by the self-evaluation of health variable, which is also statistically significant and negative. Besides, adults affected by the earthquake were more likely to be unemployed, and those unemployed individuals affected by the earthquake were less likely to be seeking for a job.