The Fiscal Cost of Hurricanes: Disaster Aid Versus Social Insurance

Tatyana Deryugina

NBER Working Paper No. 22272
Issued in May 2016
NBER Program(s):   EEE   PE

Little is known about the fiscal costs of natural disasters, especially regarding social safety nets that do not specifically target extreme weather events. This paper shows that US hurricanes lead to substantial increases in non-disaster government transfers, such as unemployment insurance and public medical payments, in affected counties in the decade after a hurricane. The present value of this increase significantly exceeds that of direct disaster aid. This implies, among other things, that the fiscal costs of natural disasters have been significantly underestimated and that victims in developed countries are better insured against them than previously thought.

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Document Object Identifier (DOI): 10.3386/w22272

Published: Tatyana Deryugina, 2017. "The Fiscal Cost of Hurricanes: Disaster Aid versus Social Insurance," American Economic Journal: Economic Policy, vol 9(3), pages 168-198.

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