Challenging the great equalizer: a study on the impact of naturl disasters on income inequality across the regions in the Philippines
Date
2018-12
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Abstract
The Philippines is often at high risk from natural disasters. Indeed, the data show that there is an
increasing trend in the number and magnitude of disasters in the country in the last century. While,
it is often argued that natural disasters are the “great equalizers” of mankind as they affect
everyone equally, there is evidence that disasters may disproportionately adversely affect the poor,
and may even result in a worsening of income inequality. As such, this paper focuses on
investigating the relationship between natural disasters and income inequality in the Philippines.
Using panel data analyses on a dataset of 17 regions spanning ten three-year intervals from 1985
to 2015, our results show that the presence of a natural disaster is positively associated with income
inequality, measured by the gini coefficient. However, when we decompose by type, we find
evidence that Geophysical, Meteorological, and Hydrological disasters increase income inequality
but Climatological disasters tend to reduce income inequality. There is also evidence that disasters
have short-term (3 years) and long-term (6 years) effects on income inequality. Furthermore, we
decompose the gini coefficient of the mean per capita income by income source to verify how
inequality by specific income source associates with natural disasters and estimation results reveal
that disasters decrease Remittance inequality – providing additional evidence for the “buffering
effect” of remittances – but increase other income sources’ inequality (i.e. Agricultural, Non-
Agricultural, Entrepreneurial, Other Income).
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Keywords
natural disaster, income inequality