The impact of hydrogeological events on firms: evidence from Italy

Using a novel dataset of natural disasters affecting Italy from 2010 onwards, we investigate the impact of hundreds of hydrogeological events on firms' survival and performance. Despite being less extreme, these events are increasingly frequent and geographically widespread, thus constituting an important but unexplored topic in the natural disasters literature. In order to assess the impact of multiple events occurring over several years, we implement a staggered difference-in-differences design that exploits the variation in the timing of the treatment. Our results show that affected firms have a 7.3 per cent higher probability of exiting the market. If they survive, in the three years after the calamity, firms experience an average decline in their revenues and employment of -4.9 and -2.2 per cent, respectively. These impacts are greater for micro-small, younger and low-tech firms.