and Income in South Asia: An FGLS Panel Analysis

The existing literature on the relationship between natural disasters and economic growth is adequate. However, it has not focused on how natural disasters impact the distribution of income in an economy. This chapter aims to critically analyze the effects of natural disasters on income inequality in selected South Asian countries during 1967–2014. The selected South Asian countries for the study include India, Bangladesh, Nepal, Pakistan, and Sri Lanka. The study uses the feasible generalized least squares (FGLS) panel model to address the first-order serial correlation and panel group-wise heteroscedasticity problem. The frequencies of natural disasters have been used as proxies for natural disasters. We use Gini coefficients, Palma ratio, and Atkinson index as the proxies for income inequality. The results of the study show that natural disasters occurred in the same year, 1-year lag, 2-year lag, and 3-year lag have a positive impact on income inequality in South Asian countries. While the effect of natural disasters occurred in the 4-year lag and 5-year lag on income inequality is not observed.