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Abstract

A natural disaster can greatly reduce human capital accumulation by households, and decrease the possibility of social mobility. Many of the actual studies of natural disasters are based on areas with low levels of insurance and high rates of poverty. In this study, I analyze the effect of the hurricane Odile in Mexico on income, consumption and education outcomes in an area with a relative high level of insurance on the principal economic activity and low rates of poverty. To analyze the effects of the hurricane on the incomes of interest, I use a difference-in-difference (DID) estimation approach. I do not find evidence of the effects of the hurricane Odile on income, school attendance, or expenditures of food. However, I find evidence that the hurricane affected some prices, and a decrease in the consumption of goods such as chicken, milk, and eggs. This reduction is observed when the head of the household is a man, but not when the head of the household is a woman.

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