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Benefiting from Disaster?: Public and Private Responses to the Wenchuan Earthquake

Author

Listed:
  • Albert Park

    (Division of Social Science, Hong Kong University of Science and Technology
    Department of Economics, Hong Kong University of Science and Technology
    Institute for Emerging Market Studies, Hong Kong University of Science and Technology)

  • Sangui Wang

    (Department of Economics, Remin University)

Abstract

We provide the first household survey-based evidence on the impact of the 2008 Wenchuan earthquake on the welfare of rural households. Asset and income losses were substantial, especially in seriously affected areas. Our main finding is that there was an overwhelming government response to the disaster. Subsidies provided to households in 2008 were so large that mean income per capita was 17.5% higher in 2008 than in 2007 and the poverty rate actually declined from 34% to 19%. Using distance from the epicenter as an instrument for earthquake damage, we find a strong positive statistical relationship between lost value of housing and other assets due to the earthquake and increases in income per capita and government transfers received, and much weaker responsiveness of private transfers, wage labor supply, and borrowing.

Suggested Citation

  • Albert Park & Sangui Wang, 2016. "Benefiting from Disaster?: Public and Private Responses to the Wenchuan Earthquake," HKUST IEMS Working Paper Series 2016-36, HKUST Institute for Emerging Market Studies, revised Jun 2016.
    • Handle: RePEc:hku:wpaper:201636
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    References listed on IDEAS

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    Cited by:

    1. Mingming Xiang & Wei Zhao & Jiao Chen, 2018. "A Comparison of Different Reconstruction Modes and Adaptive Evaluation Systems for Community Recovery Following the Wenchuan Earthquake," Sustainability, MDPI, vol. 10(11), pages 1-22, November.
    2. Huang, Lulu & Liu, Qiannan & Tang, Yugang, 2024. "Long-term economic impact of disasters: Evidence from multiple earthquakes in China," World Development, Elsevier, vol. 174(C).
    3. Gokan, Toshitaka & Kichko, Sergey & Thisse, Jacques-François, 2019. "How do trade and communication costs shape the spatial organization of firms?," Journal of Urban Economics, Elsevier, vol. 113(C).
    4. Veeshan Rayamajhee & Alok K. Bohara & Virgil Henry Storr, 2020. "Ex-Post Coping Responses and Post-Disaster Resilience: a Case from the 2015 Nepal Earthquake," Economics of Disasters and Climate Change, Springer, vol. 4(3), pages 575-599, October.
    5. Polyzos, Stathis & Samitas, Aristeidis & Kampouris, Ilias, 2021. "Economic stimulus through bank regulation: Government responses to the COVID-19 crisis," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 75(C).
    6. Paudel, Jayash & Ryu, Hanbyul, 2018. "Natural disasters and human capital: The case of Nepal’s earthquake," World Development, Elsevier, vol. 111(C), pages 1-12.
    7. Xiaoxiang Li & Shuhan Zhang, 2021. "Does Slack Buffer? Market Performance after Environmental Shock," Sustainability, MDPI, vol. 13(17), pages 1-16, August.
    8. Fayazi, Mahmood & Yeh, Emily T. & Li, Fan, 2019. "Development and divergent post-disaster trajectories in a mountain village: Temporal dynamics of differentiation after the 2008 Wenchuan earthquake," World Development, Elsevier, vol. 124(C), pages 1-1.
    9. Liu, Xinyan & Xu, Yunjiao, 2021. "Unexpected opportunity for girls: Earthquake, disaster relief and female education in China's poor counties," China Economic Review, Elsevier, vol. 70(C).
    10. Bai, Yu & Li, Yanjun, 2021. "More suffering, more involvement? The causal effects of seismic disasters on social capital," World Development, Elsevier, vol. 138(C).
    11. Yasuyuki Sawada, 2017. "Disasters, Household Decisions, and Insurance Mechanisms: A Review of Evidence and a Case Study from a Developing Country in Asia," Asian Economic Policy Review, Japan Center for Economic Research, vol. 12(1), pages 18-40, January.
    12. Xiaodong Zhu & Zijing Jin & Shunsuke Managi & XiRong Xun, 2021. "How meteorological disasters affect the labor market? The moderating effect of government emergency response policy," 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. 107(3), pages 2625-2640, July.

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    Keywords

    wenchuan earthquake; disaster; public response; private response; household survey; earthquake; housing; government transfers;
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