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How Disasters Affect Local Labor Markets: The Effects of Hurricanes in Florida

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Author Info

  • Belasen, Ariel R.

    ()
    (Southern Illinois University Edwardsville)

  • Polachek, Solomon

    ()
    (Binghamton University, New York)

Abstract

Exogenous shocks often impact a local labor market more than at the national level. This study improves upon the standard Difference in Difference (DD) approach by examining exogenous shocks using a Generalized Difference in Difference (GDD) econometric approach that identifies the effects of shocks resulting from hurricanes. Based on the Quarterly Census of Employment and Wages (QCEW) data on earnings and employment, the earnings of an average worker in Florida will increase as much as four percent within the first quarter of being hit directly by a hurricane, whereas the effects of a hurricane occurring in a neighboring county move earnings per worker in the opposite direction by roughly the same percentage. As time goes by, workers in both sets of counties will experience faster growth in their earnings than workers in completely unaffected counties; however, this is coupled with a slower growth rate in employment. Powerful hurricanes have greater effects than their weaker counterparts. Additionally, the shifts in earnings and employment can be traced back, in part, to geographic features of the counties, namely that the coastal and Panhandle counties exhibit greater effects than landlocked counties. Although focus is on hurricanes in Florida, this GDD technique is applicable to a wider range of exogenous shocks.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2976.

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Length: 38 pages
Date of creation: Aug 2007
Date of revision:
Handle: RePEc:iza:izadps:dp2976

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Keywords: difference-in-difference estimation; exogenous shock; earnings; local labor markets; employment; hurricanes;

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References

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  1. Angrist, Joshua D. & Krueger, Alan B., 1999. "Empirical strategies in labor economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 23, pages 1277-1366 Elsevier.
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Cited by:
  1. Strobl, Eric, 2008. "The Economic Growth Impact of Hurricanes: Evidence from US Coastal Counties," IZA Discussion Papers 3619, Institute for the Study of Labor (IZA).
  2. Emek Basker & Javier Miranda, 2014. "Taken By Storm: Business Survival In The Aftermath Of Hurricane Katrina," Working Papers 14-20, Center for Economic Studies, U.S. Census Bureau.
  3. Martina Kirchberger, 2014. "Natural disasters and labour markets," CSAE Working Paper Series 2014-19, Centre for the Study of African Economies, University of Oxford.
  4. Yoshito Takasaki, 2013. "Do natural disasters beget fraud victimization?: Unrealized coping through labor migration among the poor," Tsukuba Economics Working Papers 2013-002, Economics, Graduate School of Humanities and Social Sciences, University of Tsukuba.
  5. Nielsen-Pincus, Max & Moseley, Cassandra & Gebert, Krista, 2014. "Job growth and loss across sectors and time in the western US: The impact of large wildfires," Forest Policy and Economics, Elsevier, vol. 38(C), pages 199-206.
  6. Evans, Richard W. & Hu, Yingyao & Zhao, Zhong, 2007. "The Fertility Effect of Catastrophe: U.S. Hurricane Births," IZA Discussion Papers 2975, Institute for the Study of Labor (IZA).
  7. Strobl, Eric & Walsh, Frank, 2008. "The Re-Building Effect of Hurricanes: Evidence from Employment in the US Construction Industry," IZA Discussion Papers 3544, Institute for the Study of Labor (IZA).
  8. Belasen, Ariel R. & Polachek, Solomon, 2008. "How Hurricanes Affect Employment and Wages in Local Labor Markets," IZA Discussion Papers 3407, Institute for the Study of Labor (IZA).
  9. Marchand, Joseph, 2012. "Local labor market impacts of energy boom-bust-boom in Western Canada," Journal of Urban Economics, Elsevier, vol. 71(1), pages 165-174.

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