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Taken By Storm: Business Survival In The Aftermath Of Hurricane Katrina

Author

Listed:
  • Emek Basker
  • Javier Miranda

Abstract

We use Hurricane Katrina's damage to the Mississippi coast in 2005 as a natural experiment to study business survival in the aftermath of a cost shock. We find that damaged establishments that returned to operation were more resilient than those that had never been damaged. This effect is particularly strong for establishments belonging to younger and smaller rms. The effect of damage on establishments in older and larger chains was more limited, and they were subsequently less resilient having survived the damage. These selection effects persist up to five years after the initial shock. We interpret these findings as evidence that the effect of the shock is tied to the presence of financial and other constraints.

Suggested Citation

  • 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.
  • Handle: RePEc:cen:wpaper:14-20
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    File URL: https://www2.census.gov/ces/wp/2014/CES-WP-14-20.pdf
    File Function: First version, 2014
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    References listed on IDEAS

    as
    1. Emek Basker, 2007. "When Good Instruments Go Bad," Working Papers 0706, Department of Economics, University of Missouri.
    2. John Haltiwanger & Ron S. Jarmin & Javier Miranda, 2010. "Who Creates Jobs? Small vs. Large vs. Young," Working Papers 10-17, Center for Economic Studies, U.S. Census Bureau.
    3. Jeffrey A. Groen† & Mark J. Kutzbach & Anne E. Polivka‡, 2015. "Storms and Jobs: The Effect of Hurricanes on Individuals’ Employment and Earnings over the Long Term," Working Papers 15-21, Center for Economic Studies, U.S. Census Bureau.
    4. Emek Basker & Michael Noel, 2009. "The Evolving Food Chain: Competitive Effects of Wal-Mart's Entry into the Supermarket Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(4), pages 977-1009, December.
    5. Teresa C Fort & John Haltiwanger & Ron S Jarmin & Javier Miranda, 2013. "How Firms Respond to Business Cycles: The Role of Firm Age and Firm Size," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(3), pages 520-559, August.
    6. Andrea Leiter & Harald Oberhofer & Paul Raschky, 2009. "Creative Disasters? Flooding Effects on Capital, Labour and Productivity Within European Firms," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(3), pages 333-350, July.
    7. Steven J. Davis & John Haltiwanger & Ronald S. Jarmin & C.J. Krizan & Javier Miranda & Alfred Nucci & Kristin Sandusky, 2009. "Measuring the Dynamics of Young and Small Businesses: Integrating the Employer and Nonemployer Universes," NBER Chapters, in: Producer Dynamics: New Evidence from Micro Data, pages 329-366, National Bureau of Economic Research, Inc.
    8. Mark Doms & Ron Jarmin & Shawn Klimek, 2004. "Information technology investment and firm performance in US retail trade," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 13(7), pages 595-613.
    9. Tatyana Deryugina & Laura Kawano & Steven Levitt, 2018. "The Economic Impact of Hurricane Katrina on Its Victims: Evidence from Individual Tax Returns," American Economic Journal: Applied Economics, American Economic Association, vol. 10(2), pages 202-233, April.
    10. Roger R. Betancourt, 2004. "The Economics of Retailing and Distribution," Books, Edward Elgar Publishing, number 3511, April.
    11. Brown, J. David & Earle, John S., 2013. "Do SBA Loans Create Jobs?," IZA Discussion Papers 7544, Institute of Labor Economics (IZA).
    12. Doms, Mark & Dunne, Timothy & Roberts, Mark J., 1995. "The role of technology use in the survival and growth of manufacturing plants," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 523-542, December.
    13. Ariel R. Belasen & Solomon W. Polachek, 2009. "How Disasters Affect Local Labor Markets: The Effects of Hurricanes in Florida," Journal of Human Resources, University of Wisconsin Press, vol. 44(1).
    14. Ron Jarmin, 1999. "Government Technical Assistance Programs* And Plant Survival: The Role Of Plant Ownership Type," Working Papers 99-2, Center for Economic Studies, U.S. Census Bureau.
    15. Rachel Croson & Uri Gneezy, 2009. "Gender Differences in Preferences," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 448-474, June.
    16. Susan Coleman & Alicia Robb, 2009. "A comparison of new firm financing by gender: evidence from the Kauffman Firm Survey data," Small Business Economics, Springer, vol. 33(4), pages 397-411, December.
    17. Ron S Jarmin & Javier Miranda, 2002. "The Longitudinal Business Database," Working Papers 02-17, Center for Economic Studies, U.S. Census Bureau.
    18. Jeffrey A. Groen† & Mark J. Kutzbach & Anne E. Polivka‡, 2015. "Storms and Jobs: The Effect of Hurricanes on Individuals’ Employment and Earnings over the Long Term," Working Papers 15-21r, Center for Economic Studies, U.S. Census Bureau.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Jeffrey A. Groen† & Mark J. Kutzbach & Anne E. Polivka‡, 2015. "Storms and Jobs: The Effect of Hurricanes on Individuals’ Employment and Earnings over the Long Term," Working Papers 15-21, Center for Economic Studies, U.S. Census Bureau.
    2. Benjamin L. Collier & Andrew F. Haughwout & Howard C. Kunreuther & Erwann O. Michel-Kerjan & Michael A. Stewart, 2016. "Firms’ Management of Infrequent Shocks," NBER Working Papers 22612, National Bureau of Economic Research, Inc.
    3. repec:aea:aejpol:v:9:y:2017:i:3:p:199-228 is not listed on IDEAS
    4. Justin Gallagher & Daniel Hartley, 2017. "Household Finance after a Natural Disaster: The Case of Hurricane Katrina," American Economic Journal: Economic Policy, American Economic Association, vol. 9(3), pages 199-228, August.
    5. Matthew A. Cole & Robert J R Elliott & Toshihiro Okubo & Eric Strobl, 2014. "Natural Disasters and the Birth, Life and Death of Plants: The Case of the Kobe Earthquake," Working Papers 2014-114, Department of Research, Ipag Business School.
    6. Jeffrey A. Groen† & Mark J. Kutzbach & Anne E. Polivka‡, 2015. "Storms and Jobs: The Effect of Hurricanes on Individuals’ Employment and Earnings over the Long Term," Working Papers 15-21r, Center for Economic Studies, U.S. Census Bureau.
    7. Richard Fabling & Arthur Grimes & Levente Timar, 2014. "Natural Selection: Firm Performance Following the Canterbury Earthquakes," Working Papers 14_08, Motu Economic and Public Policy Research.

    More about this item

    Keywords

    Retail; chain; credit constraints; hurricane; Katrina; natural disaster; exit;

    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
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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