Human Capital Accumulation and Disasters

In 2005 a large earthquake struck Northern Pakistan. Exposure to the earthquake was plausibly exogenous to household and individual characteristics, but households received substantial compensation after the earthquake. Four years later, there were no differences in household or adult outcomes by earthquake exposure. Nevertheless, children under age 3 at the time of the earthquake accumulated large height deficits and children aged 3-11 scored significantly worse on academic tests, unless their mothers had completed primary education. Even disasters that are accompanied with substantial compensation can lead to severe disruptions in the accumulation of human capital.