The trap of climate change-induced “natural” disasters and inequality

Abstract

The purpose of the present paper is to disentangle the mechanisms that connect climate change-induced disasters, inequality and vulnerability by accounting for both directions of causality. We do so by means of a simultaneous equations approach on a panel of 149 countries from 1992 to 2018. The empirical analysis reveals that countries with higher levels of income inequality suffer greater damages when hit by a natural disaster. At the same time, inequality is found to increase the number of people affected by disasters. Our analysis discloses the existence of a vicious cycle that keeps some countries stuck in a disasters-inequality trap.