Robert Baade () (Department of Economics and Business, Lake Forest College) Robert Baumann () (Department of Economics, College of the Holy Cross) Victor Matheson () (Department of Economics, College of the Holy Cross)
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Hurricane Katrina caused the greatest damage of any hurricane in American history. We look at the rebuilding effort in New Orleans through the lens of two other disasters that occurred in 1992: Hurricane Andrew in Miami and the Rodney King riots in Los Angeles. The rebuilding effort in New Orleans shares similarities with both events, combining the impact of a hurricane on infrastructure and private businesses, and the prospect of an uneven recovery biased against racial minorities and the economically disadvantaged. Using the experience of the King riots, our concern is that the rebuilding effort will be modest at best in poorer areas and slow to develop. There is the prospect of long lasting negative effects on income in poor neighborhoods. In wealthier areas, the pecuniary incentive for private business and citizens to rebuild is stronger, and in some cases the rebuilding effort can cause net income gains in response to a natural disaster of the scale of Hurricane Andrew. Based on these events, we recommend targeting a disproportionate amount of federal transfers towards poorer areas to stimulate growth.
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Paper provided by College of the Holy Cross, Department of Economics in its series Working Papers with number
0515.
Find related papers by JEL classification: E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes H59 - Public Economics - - National Government Expenditures and Related Policies - - - Other O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Regional, Urban, and Rural Analyses Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes
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