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Storms and Jobs: The Effect of Hurricanes on Individuals’ Employment and Earnings over the Long Term

Author

Listed:
  • Jeffrey A. Groen†
  • Mark J. Kutzbach
  • Anne E. Polivka‡

Abstract

Hurricanes Katrina and Rita devastated the U.S. Gulf Coast in 2005, destroying homes and businesses and causing mass evacuations. The economic effects of disasters are often studied at a regional level, but little is known about the responsiveness of individuals’ employment and earnings to the damages, disruption, and rebuilding—particularly in the longer run. Our analysis is based on data that tracks workers over nine years, including seven years after the storms. We estimate models that compare the evolution of earnings for workers who resided in a storm-affected area with those who resided in a suitable control counties. We find that, on average, the storms reduced the earnings of affected individuals during the first year after the storm. These losses reflect various aspects of the short-run disruption caused by the hurricanes, including job separations, migration to other areas, and business contractions. Starting in the third year after the storms, however, we find that the earnings of affected individuals outpaced the earnings of individuals in the control sample. We provide evidence that the long-term earnings gains were the result of wage growth in the affected areas relative to the control areas, due to reduced labor supply and increased labor demand, especially in sectors related to rebuilding. Despite the short-term earnings losses, we find a net increase in average quarterly earnings among affected individuals over the entire post-storm period. However, those who worked in sectors closely tied to tourism or the size of the local population experienced net earnings losses.

Suggested Citation

  • 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.
    • Handle: RePEc:cen:wpaper:15-21
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    References listed on IDEAS

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    Cited by:

    1. 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.
    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. Krzysztof Karbownik & Anthony Wray, 2019. "Long-Run Consequences of Exposure to Natural Disasters," Journal of Labor Economics, University of Chicago Press, vol. 37(3), pages 949-1007.
    4. Kelly D. Edmiston, 2017. "Financial Vulnerability and Personal Finance Outcomes of Natural Disasters," Research Working Paper RWP 17-9, Federal Reserve Bank of Kansas City.
    5. Ortega, Francesc & Taspinar, Süleyman, 2016. "Rising Sea Levels and Sinking Property Values: The Effects of Hurricane Sandy on New York's Housing Market," IZA Discussion Papers 10374, Institute of Labor Economics (IZA).
    6. Ortega, Francesc & Taṣpınar, Süleyman, 2018. "Rising sea levels and sinking property values: Hurricane Sandy and New York’s housing market," Journal of Urban Economics, Elsevier, vol. 106(C), pages 81-100.
    7. Peri, Giovanni & Rury, Derek & Wiltshire, Justin C., 2020. "The Economic Impact of Migrants from Hurricane Maria," IZA Discussion Papers 13049, Institute of Labor Economics (IZA).
    8. 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.
    9. Braun, Sebastian T. & Dwenger, Nadja, 2020. "Settlement location shapes the integration of forced migrants: Evidence from post-war Germany⁎," Explorations in Economic History, Elsevier, vol. 77(C).
    10. Emek Basker & Javier Miranda, 2014. "Taken by Storm: Business Financing, Survival, and Contagion in the Aftermath of Hurricane Katrina," Working Papers 1406, Department of Economics, University of Missouri, revised 23 Oct 2014.
    11. Indaco, Agustín & Ortega, Francesc & Taspinar, Süleyman, 2019. "Hurricanes, Flood Risk and the Economic Adaptation of Businesses," IZA Discussion Papers 12474, Institute of Labor Economics (IZA).
    12. 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.

    More about this item

    Keywords

    Disaster; Hurricane; Employment; Earnings; Local Labor Markets; Katrina; Rita;

    JEL classification:

    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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