Risks, ex-ante actions, and public assistance

Abstract

"This paper uses panel data from Bangladesh, Ethiopia, and Malawi to examine the impacts of natural disasters on schooling investments, with a particular focus on the roles of ex-ante actions and ex-post responses. We find that the importance of ex-ante actions depends on disaster risks and the likelihood of public assistance, potentially creating substitution between the two actions. We find that higher future probabilities of disaster increase the likelihood of agents holding more human capital and/or livestock relative to land; this asset-portfolio effect is significant in disaster-prone areas. Our empirical results support the roles of both ex-ante and ex-post (public assistance) responses in coping with disasters, but we see interesting variations across countries. In Ethiopia, public assistance plays a more important role than ex-ante actions in mitigating the impact of shocks on child schooling. In contrast, Malawi households rely more on private ex-ante actions than on public assistance. The Bangladesh example shows that active roles are played by both ex-ante and ex-post actions. These observations are consistent with our findings on the relationship between ex-ante actions and disaster risks. Our results also show that among ex-ante actions, human capital accumulated in the household prior to disasters helps mitigate the negative effects of a disaster in both the short and long runs." --from authors' abstract