Natural Disasters and Economic Dynamics : Evidence from the Kerala Floods

Exceptionally high rainfall in the Indian state of Kerala caused major flooding in 2018. This paper estimates the short-run causal impact of the disaster on the economy, using a difference-in-difference approach. Monthly nighttime light intensity,...

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Main Authors:	Beyer, Robert C. M., Narayanan, Abhinav, Thakur, Gogol Mitra
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC: 2022
Subjects:	ECONOMIC IMPACT OF FLOOD FLOODS NATURAL DISASTER IMPACT RURAL LABOR MARKET ENVIRONMENTAL DISASTER WAGE IMPACT ECONOMIC DYNAMICS NATURAL DISASTERS AGGREGATE ACTIVITY HOUSEHOLD BEHAVIOR, SPATIAL ANALYSIS
Online Access:	http://documents.worldbank.org/curated/en/099822206132239289/IDU0beef79560a37d04887082fb008ee88012ac5 http://hdl.handle.net/10986/37545

id	okr-10986-37545
recordtype	oai_dc
spelling	okr-10986-375452022-06-15T05:10:43Z Natural Disasters and Economic Dynamics : Evidence from the Kerala Floods Beyer, Robert C. M. Narayanan, Abhinav Thakur, Gogol Mitra ECONOMIC IMPACT OF FLOOD FLOODS NATURAL DISASTER IMPACT RURAL LABOR MARKET ENVIRONMENTAL DISASTER WAGE IMPACT ECONOMIC DYNAMICS NATURAL DISASTERS AGGREGATE ACTIVITY HOUSEHOLD BEHAVIOR, SPATIAL ANALYSIS Exceptionally high rainfall in the Indian state of Kerala caused major flooding in 2018. This paper estimates the short-run causal impact of the disaster on the economy, using a difference-in-difference approach. Monthly nighttime light intensity, a proxy for aggregate economic activity, suggests that activity declined for three months during the disaster but boomed subsequently. Automated teller machine transactions, a proxy for consumer demand, declined and credit disbursal increased, with households borrowing more for housing and less for consumption. In line with other results, both household income and expenditure declined during the floods. Despite a strong wage recovery after the floods, spending remained lower relative to the unaffected districts. The paper argues that increased labor demand due to reconstruction efforts increased wages after the floods and provides corroborating evidence: (i) rural labor markets tightened, (ii) poorer households benefited more, and (iii) wages increased most where government relief was strongest. The findings confirm the presence of interesting economic dynamics during and right after natural disasters that remain in the shadow when analyzed with annual data. 2022-06-14T20:30:23Z 2022-06-14T20:30:23Z 2022-06 Working Paper http://documents.worldbank.org/curated/en/099822206132239289/IDU0beef79560a37d04887082fb008ee88012ac5 http://hdl.handle.net/10986/37545 English Policy Research Working Papers;10084 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC: Policy Research Working Paper Publications & Research India
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ECONOMIC IMPACT OF FLOOD FLOODS NATURAL DISASTER IMPACT RURAL LABOR MARKET ENVIRONMENTAL DISASTER WAGE IMPACT ECONOMIC DYNAMICS NATURAL DISASTERS AGGREGATE ACTIVITY HOUSEHOLD BEHAVIOR, SPATIAL ANALYSIS
spellingShingle	ECONOMIC IMPACT OF FLOOD FLOODS NATURAL DISASTER IMPACT RURAL LABOR MARKET ENVIRONMENTAL DISASTER WAGE IMPACT ECONOMIC DYNAMICS NATURAL DISASTERS AGGREGATE ACTIVITY HOUSEHOLD BEHAVIOR, SPATIAL ANALYSIS Beyer, Robert C. M. Narayanan, Abhinav Thakur, Gogol Mitra Natural Disasters and Economic Dynamics : Evidence from the Kerala Floods
geographic_facet	India
relation	Policy Research Working Papers;10084
description	Exceptionally high rainfall in the Indian state of Kerala caused major flooding in 2018. This paper estimates the short-run causal impact of the disaster on the economy, using a difference-in-difference approach. Monthly nighttime light intensity, a proxy for aggregate economic activity, suggests that activity declined for three months during the disaster but boomed subsequently. Automated teller machine transactions, a proxy for consumer demand, declined and credit disbursal increased, with households borrowing more for housing and less for consumption. In line with other results, both household income and expenditure declined during the floods. Despite a strong wage recovery after the floods, spending remained lower relative to the unaffected districts. The paper argues that increased labor demand due to reconstruction efforts increased wages after the floods and provides corroborating evidence: (i) rural labor markets tightened, (ii) poorer households benefited more, and (iii) wages increased most where government relief was strongest. The findings confirm the presence of interesting economic dynamics during and right after natural disasters that remain in the shadow when analyzed with annual data.
format	Working Paper
author	Beyer, Robert C. M. Narayanan, Abhinav Thakur, Gogol Mitra
author_facet	Beyer, Robert C. M. Narayanan, Abhinav Thakur, Gogol Mitra
author_sort	Beyer, Robert C. M.
title	Natural Disasters and Economic Dynamics : Evidence from the Kerala Floods
title_short	Natural Disasters and Economic Dynamics : Evidence from the Kerala Floods
title_full	Natural Disasters and Economic Dynamics : Evidence from the Kerala Floods
title_fullStr	Natural Disasters and Economic Dynamics : Evidence from the Kerala Floods
title_full_unstemmed	Natural Disasters and Economic Dynamics : Evidence from the Kerala Floods
title_sort	natural disasters and economic dynamics : evidence from the kerala floods
publisher	World Bank, Washington, DC:
publishDate	2022
url	http://documents.worldbank.org/curated/en/099822206132239289/IDU0beef79560a37d04887082fb008ee88012ac5 http://hdl.handle.net/10986/37545
_version_	1764487430298140672

Natural Disasters and Economic Dynamics : Evidence from the Kerala Floods

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