Hurricane Mitch hit Nicaragua in November of 1998. I exploit the opportunity afforded by Mitch to measure the impact of a truly exogenous change in the family budget on children�s and teenagers� advancement through the school system, and also examine the palliative role of remittances. Mitch spared some areas of Nicaragua; families residing in those areas serve as control group in this �natural� experiment. In rural areas, between the years 1998 and 2001, the estimated survival function for school enrollment for the �treated� children improves less than for the control group at every grade level from grades 1 through 6. While rural incomes of the treated families had recovered by 2001, the stagnation in income growth in the aftermath of the hurricane apparently had a lasting effect on school retention for rural children. In urban areas, the survival functions decline roughly equally for the treatment and control groups, despite considerable growth in incomes by 2001. |