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Natural selection: Firm performance following the Canterbury earthquakes

Author

Listed:
  • Fabling, Richard
  • Grimes, Arthur
  • Timar, Levente

Abstract

The Canterbury earthquakes in September 2010 and February 2011 caused major upheaval to the people of the region. The second quake killed 185 people, forced many from their homes, and closed Christchurch’s central business district. This paper examines the consequential effects on business in the region, paying particular attention to heterogeneity in firm-level outcomes. Consistent with aggregate statistics, we quantify substantial variation in firm outcomes by industry and by location. In addition, we show that firms’ prior financial viability heavily influenced their chance of survival. Conditional on continuing to operate, average profitability returned to pre-quake levels relatively quickly, albeit subject to reduced inputs. Taken together, these effects support economic models where firm exit is driven by selection on profitability.

Suggested Citation

  • Fabling, Richard & Grimes, Arthur & Timar, Levente, 2014. "Natural selection: Firm performance following the Canterbury earthquakes," Motu Working Papers 290606, Motu Economic and Public Policy Research.
    • Handle: RePEc:ags:motuwp:290606
    DOI: 10.22004/ag.econ.290606
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    Cited by:

    1. Richard Fabling, 2026. "Auckland firm performance in Covid-19 lockdown," Motu Working Papers 26_03, Motu Economic and Public Policy Research.
    2. Sin Meun How & Geoffrey N. Kerr, 2019. "Earthquake Impacts on Immigrant Participation in the Greater Christchurch Construction Labor Market," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 38(2), pages 241-269, April.
    3. Daniel Arce & Douglas Cook & Robert Kieschnick, 2015. "On the evolution of corporate capital structures," Journal of Evolutionary Economics, Springer, vol. 25(3), pages 561-583, July.
    4. Aloysius Gunadi Brata & Henri L. F. De Groot & Wouter Zant, 2018. "Shaking up the Firm Survival: Evidence from Yogyakarta (Indonesia)," Economies, MDPI, vol. 6(2), pages 1-14, April.
    5. Greer, Glen & Kaye-Blake, Bill, 2017. "The impacts of research in an era of more stringent performance evaluation," 2017 Conference, October 19-20, Rotorua, New Zealand 269522, New Zealand Agricultural and Resource Economics Society.
    6. Sally Owen & Ilan Noy & Jacob Pástor-Paz & David Fleming, 2019. "EQC and extreme weather events (part 2): Measuring the impact of insurance on New Zealand landslip, storm and flood recovery using nightlights," Motu Working Papers 19_19, Motu Economic and Public Policy Research.

    More about this item

    Keywords

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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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