Three essays on environmental and developmental economics
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This dissertation studies how environmental shocks, risk attitudes and time preferences affect key decisions made by households which affect their long term well-being. The first chapter studies how natural disasters affect household migration. I separately examine the impact of natural disasters on the tendency of entire households to migrate, as well as for part of the household to split off and migrate. Contrary to conventional wisdom, I find that natural disasters significantly reduce migration rates. There are various channels of impacts: earthquakes reduce household size, earnings and non-business assets, each of which tends to reduce migration rates. Volcanic eruptions on the other hand raise the value of farmland, which, in turn, reduces migration. The second chapter studies the impact of natural disasters on household fertility. I show that natural disasters have a significant negative effect on fertility. The study explores various channels to explain the reduction in number of children born. I discover two possible channels for lower fertility: (1) wealth effect and (2) effect of working women. Natural disasters destroy assets and consequently lower fertility because the decrease in wealth reduces the capacity of parents to have more children. Natural disasters also induce married females to work more and have fewer children. The third chapter examines how intrinsic preferences of risk aversion and impatience estimated from responses to hypothetical choices determine household economic decisions, which in turn aflect their future well-being. More risk-averse and impatient households experience lower growth in consumption, income and assets. More risk-averse households are less likely to invest in financial assets and start their own businesses. More impatient households are less likely to purchase insurance and invest in financial assets. The chapter investigates the extent to which these decisions were correlated with growth in consumption, income and assets.
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