Impact of Earthquake on Human Capital Formation

Abstract

The study of the impact of natural disasters on human capital is still very developed. This study aims to analyze the long-term impact of natural disasters experienced at a child's early age on human capital formation, with a cognitive score as a proxy. Using the Difference-in-Difference method and IFLS data with the 2006 Yogyakarta earthquake observations, this study results imply that natural disasters give their losses to human capital formation. Children who at an early age (around 0-2 years) experienced the disaster had 1,62 points lower cognitive score. The impact on cognitive scores was also more profound for the child's age at the time of the disaster, especially at the age of 1 year and under, compared to the child's position at the age of 4 or 5 years.