The role of human and social capital in earthquake recovery in Nepal

Human and social capital help households cope with disastrous shocks. We analyse panel survey data from before and after the 2015 Nepal earthquakes to disentangle the association between post-earthquake income recovery of households and their social and human capital before the earthquake. Our analysis uses multidimensional measures of human and social capital and a machine-learning algorithm, the Bayesian additive regression tree. This approach helps us address measurement and estimation challenges that commonly affect social science analyses of observational data with many covariates and confounding variables. Our analysis shows the relative association of human capital with income recovery is greater on average than that of social capital, human and social capital serve as partial substitutes for each other when it comes to household income recovery, and the association of different capitals with economic recovery is nonlinear and heterogeneous across household education levels. Our results suggest that disaster-support policies can be structured with respect to human and social capital endowments to support more effective recovery of disaster-affected households.