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What Happened to Kobe? A Reassessment of the Impact of the 1995 Earthquake in Japan

Author

Listed:
  • William DuPont

    () (Department of Economics, University of Hawaii at Manoa)

  • Ilan Noy

    () (Department of Economics, University of Hawaii at Manoa)

Abstract

The received wisdom is that the devastation wrought by the 1995 Kobe earthquake did not have any long-term impact on the Japanese economy, nor much impact on Kobe itself. We re-evaluate the evidence using a new methodology, synthetic control, and find a persistent and still continuing adverse impact of the quake on the economy of Kobe more than 15 years after the event. Using the methodology developed by Abadie et al. (2010), we construct counter-factual dynamics for the Kobe economy. We identify a decline in per capita GDP that is attributable to the quake and is persistent, long-term, and clearly observable even 15 years after the quake. GDP per capita in 2007 was 500,000 yen per person lower (13% decrease) than it would have been had the earthquake not occurred. Importantly, this adverse long-term impact is identified in a wealthy region of a developed country, and with the backing of a deep-pocketed fiscal authority.

Suggested Citation

  • William DuPont & Ilan Noy, 2012. "What Happened to Kobe? A Reassessment of the Impact of the 1995 Earthquake in Japan," Working Papers 201204, University of Hawaii at Manoa, Department of Economics.
  • Handle: RePEc:hai:wpaper:201204
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    References listed on IDEAS

    as
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    Cited by:

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    2. Bruno Ferman & Cristine Pinto & Vitor Possebom, 2020. "Cherry Picking with Synthetic Controls," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(2), pages 510-532, March.
    3. Hayakawa, Kazunobu & Matsuura, Toshiyuki & Okubo, Fumihiro, 2015. "Firm-level impacts of natural disasters on production networks: Evidence from a flood in Thailand," Journal of the Japanese and International Economies, Elsevier, vol. 38(C), pages 244-259.
    4. Lynham, John & Noy, Ilan & Page, Jonathan, 2017. "The 1960 Tsunami in Hawaii: Long-Term Consequences of a Coastal Disaster," World Development, Elsevier, vol. 94(C), pages 106-118.
    5. Rohan Best & Paul J. Burke, 2019. "Macroeconomic impacts of the 2010 earthquake in Haiti," Empirical Economics, Springer, vol. 56(5), pages 1647-1681, May.
    6. Sawada, Yasuyuki & Takasaki, Yoshito, 2017. "Natural Disaster, Poverty, and Development: An Introduction," World Development, Elsevier, vol. 94(C), pages 2-15.
    7. Paudel, Jayash & Ryu, Hanbyul, 2018. "Natural disasters and human capital: The case of Nepal’s earthquake," World Development, Elsevier, vol. 111(C), pages 1-12.
    8. Fujiki, Hiroshi & Hsiao, Cheng, 2015. "Disentangling the effects of multiple treatments—Measuring the net economic impact of the 1995 great Hanshin-Awaji earthquake," Journal of Econometrics, Elsevier, vol. 186(1), pages 66-73.
    9. Ilan Noy, 2016. "A Global Comprehensive Measure of the Impact of Natural Hazards and Disasters," Global Policy, London School of Economics and Political Science, vol. 7(1), pages 56-65, February.
    10. Craig R. Parsons, 2016. "Disasters and trade: did Hurricane Katrina affect US imports?," International Economics and Economic Policy, Springer, vol. 13(2), pages 177-194, April.
    11. Lisa Doyle & Ilan Noy, 2015. "The short-run nationwide macroeconomic effects of the Canterbury earthquakes," New Zealand Economic Papers, Taylor & Francis Journals, vol. 49(2), pages 134-156, August.
    12. Yasuhide Okuyama, 2016. "Long-Run Effect Of A Disaster: Case Study On The Kobe Earthquake," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(01), pages 1-18, March.
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    15. Puzzello, Laura & Gomis-Porqueras, Pedro, 2018. "Winners and losers from the €uro," European Economic Review, Elsevier, vol. 108(C), pages 129-152.

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    More about this item

    Keywords

    Natural disaster; earthquake; Kobe; Great Hanshin; long-run impact;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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