Modeling Impact of Natural Hazard-Induced Disasters on Income Distribution in the United States

Abstract

Economic damage due to hurricane activities has been shown to impact income inequality in the coastal states of the United States. We consider 17 other natural hazards, in addition to hurricanes, that affected the entire United States for the period 1970–2013. Two fixed effects models were developed to quantify the relationship between income inequality and economic and demographic variables, including crop and property losses from natural hazard-induced disasters. These models include state-by-year and region-by-year fixed effects models. Our findings show that the damages from all natural hazards impact income distribution across the United States, not only in hurricane-affected areas, but also in non-hurricane states. The results of our study have important implications for the insurance industry and government policymakers.

Keywords

Disaster insurance / Gini coefficient / Income distribution / Natural hazard-induced disasters / United States

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