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How Hurricanes Affect Employment and Wages in Local Labor Markets

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Author Info
Belasen, Ariel R. () (Saint Louis University)
Polachek, Solomon () (Binghamton University, New York)

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Abstract

This paper adopts a generalized-difference-in-difference (GDD) technique outlined in Ariel R. Belasen and Solomon W. Polachek (IZA Discussion Paper #2976) to examine the impact of hurricanes on the labor market. We find that earnings of the average worker in a Florida county rises over 4% within the first quarter of being hit by a major Category 4 or 5 hurricane relative to counties not hit, and rises about 1¼% for workers in Florida counties hit by less major Category 1-3 hurricanes. Concomitantly, employment falls between 1½ and 5% depending on hurricane strength. On the other hand, the effects of hurricanes on neighboring counties have the opposite effects, moving earnings down between 3 and 4% in the quarter the hurricane struck. To better examine the specific shocks, we also observe sectoral employment shifts. Finally, we conduct a time-series analysis and find that over time, there is somewhat of a cobweb with earnings and employment rising and falling each quarter over a two-year time period.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3407.

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Length: 2008 pages
Date of creation: Mar 2008
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Publication status: published in: American Economic Review, Papers and Proceedings, 2008, 98 (2), 49-53
Handle: RePEc:iza:izadps:dp3407

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Related research
Keywords: employment; exogenous shock; difference-in-difference estimation; local labor market; earnings; sectoral shifts;

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Find related papers by JEL classification:
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
J49 - Labor and Demographic Economics - - Particular Labor Markets - - - Other
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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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Ariel R. Belasen & Solomon W. Polachek, 2007. "How Disasters Affect Local Labor Markets: The Effects of Hurricanes in Florida," IZA Discussion Papers 2976, Institute for the Study of Labor (IZA). [Downloadable!]
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  2. Alberto Abadie & Alexis Diamond & Jens Hainmueller, 2007. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California's Tobacco Control Program," NBER Technical Working Papers 0335, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Lucas, Robert E, Jr & Rapping, Leonard A, 1969. "Price Expectations and the Phillips Curve," American Economic Review, American Economic Association, vol. 59(3), pages 342-50, June. [Downloadable!] (restricted)
  4. 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. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  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). [Downloadable!]
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