Three essays on household welfare

This dissertation encompasses three chapters that study the measurement of poverty and the impact of shocks on household welfare. Below are the individual abstracts for each chapter. Chapter 1: Subjective Poverty and Natural Disasters: Evidence from the 2007 Earthquake in Peru This paper examines the causal impact of natural disasters on subjective poverty, defined on the basis of subjective qualitative assessments of household heads about the poverty status of their families. The paper makes use of a nationally representative household survey combined with the timing and location of the 2007 Peruvian earthquake to identify its impact on subjective poverty. The paper additionally employs GPS information on village distance to the earthquake epicenter to more accurately assess households’ exposure to the shock. The impact of the earthquake on subjective poverty is compared with its impact on objective poverty, which is based on per capita household consumption. Results indicate that both objective and subjective poverty increase after the event. More interestingly, this paper provides evidence that the earthquake produces a sustained welfare loss that extends beyond its negative impact on consumption. Effects are robust to different specifications, including region-specific time trends, household- and province-level intensity measures, and an instrumental variables strategy. Chapter 2: To be Poor or to Feel Poor: Subjective Poverty Line Estimation in Peru This paper estimates the poverty line by means of a survey question on subjective economic welfare that asks individuals whether they consider their households to be poor or not. The paper argues that this survey question is the most appropriate to estimate “subjective” poverty lines, since it overcomes the main limitations of many other subjective poverty questions used in the literature. Using household data from Peru, this paper uniquely compares results using the subjective poverty question proposed along with results obtained when applying other subjective poverty questions used in earlier studies. Results are also compared to the official estimates of poverty. The poverty rate based on the subjective question proposed in this paper is greater than the official poverty rate, though the difference between both poverty ratios decreases over time. There are some regional differences; the official objective poverty rate is greater in rural areas compared to urban areas and the urban-rural gap is even greater when using the subjective question. Chapter 3: Wars and Child Health: Evidence from the Eritrean-Ethiopian Conflict This is the first paper using household survey data from two countries involved in an international war (Eritrea and Ethiopia) to measure the conflict’s impact on children’s health in both nations. The identification strategy uses event data to exploit exogenous variation in the conflict’s geographic extent and timing and the exposure of different children’s birth cohorts to the fighting. The paper uniquely incorporates GPS information on the distance between survey villages and conflict sites to more accurately measure a child’s war exposure. War-exposed children in both countries have lower height-for-age Z-scores, with the children in the war-instigating and losing country (Eritrea) suffering more than the winning nation (Ethiopia). Negative impacts on boys and girls of being born during the conflict are comparable to impacts for children alive at the time of the war. Effects are robust to including region-specific time trends, alternative conflict exposure measures, and an instrumental variables strategy