Human Capital Investment after the Storm.

The article investigates how household exposure to Hurricane Harvey's flooding in 2017 affected investments in higher education among college-aged adults in Houston, Texas. Using a difference-in-differences approach with detailed credit and enrollment data, the study finds that individuals from heavily flooded areas were about 7% less likely to have student loans post-disaster, with the largest effects among prospective first-generation college students. Correspondingly, Texas universities and colleges with higher shares of students from disaster-affected counties experienced declines in enrollment and graduation rates, particularly among younger cohorts and at more expensive institutions. Additionally, there was a shift in major selection toward fields with higher expected earnings, indicating a decrease in the quantity but an increase in the intensity of human capital investments after the storm. The findings suggest liquidity constraints and wealth shocks as key mechanisms influencing these educational decisions, highlighting potential long-term implications for inequality and economic growth in disaster-prone areas.