In human capital literature, it is established that skills are cross-productive and
that the production technology is dynamic. This study looks at a case of Thailand
and shows that a damage of mental health capital early on in life has a significant
adverse effect on schooling attainment. We take the event of Typhoon Gay in 1989 in
Thailand’s South-Eastern region as a random trigger of Post-Traumatic Stress Disorder
prevalence amongst young children in the disaster area. Using both micro datasets
and a unique survey, we find strong evidence that disaster affected children suffered
from a long-term undetected reduction in their mental health capital and thus worse
accumulation of skills in other dimensions.