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Natural disasters and labour markets

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  • Martina Kirchberger

Abstract

While it is clear that natural disasters have serious welfare consequences for affected populations, less is known with respect to how local labour markets in low income countries adjust to such large shocks, in particular the general equilibrium effects of the increase in the demand for construction as well as the inflow of resources in the aftermath of natural disasters. Combining data from the Indonesia Family Life Survey, the Desinventar database, the US Geological Survey and district level employment indicators, this paper explores how a large earthquake in Indonesia affected local labour markets, in particular the evolution of wages and employment across sectors. We find that wage growth in the agriculture sector is significantly higher in earthquake affected areas. We propose two mechanisms for this result: a higher growth rate of the price of rice in agricultural communities which switch from being net sellers to net buyers of rice and a downward shift in the supply of workers in the agricultural sector. We show evidence for both mechanisms.

Suggested Citation

  • Martina Kirchberger, 2014. "Natural disasters and labour markets," CSAE Working Paper Series 2014-19, Centre for the Study of African Economies, University of Oxford.
  • Handle: RePEc:csa:wpaper:2014-19
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    More about this item

    Keywords

    Local labour markets; natural disasters;

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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