Weathering an Unexpected Financial Shock: The Role of Cash Grants on Household Finance and Business Survival
52 Pages Posted: 27 Nov 2019 Last revised: 18 Mar 2021
Date Written: May 21, 2020
We estimate the causal effect of cash grants on household finance and business survival following a natural disaster. Disaster-affected individuals in severely damaged blocks with access to cash grants have 30% less credit card debt following the disaster than those without access to cash grants. Grants reduce bill delinquency for credit-constrained victims, and overall migration. The grants play a role in mitigating the effects of the shock to businesses, resulting in 9% more establishments and 12% more employees post-disaster in the average-damaged neighborhood where residents receive grants. These effects are concentrated among small non-manufacturing establishments that rely on local demand.
Keywords: Natural disasters, households finance, regional economic activity
JEL Classification: D14, Q54, R11
Suggested Citation: Suggested Citation