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Agglomeration and Fragility: Firm Responses to the 1923 Great Kanto Earthquake

Author

Listed:
  • Tetsuji Okazaki

    (Meiji Gakuin University)

  • Toshihiro Okubo

    (Keio University)

  • Eric Strobl

    (University of Bern)

Abstract

In this paper we investigate how the disruption of local agglomeration economies affects firm adjustment following a catastrophic urban disaster. To this end we digitalized a unique survey of firms in Tokyo City completed shortly after the earthquake and before any government reconstruction intervention. Using detailed information on the damage experienced by firms and the main good that they produced, as well as where they were located, we construct measures of losses of local agglomeration economies by identifying firms that either permanently ceased operation or relocated elsewhere. To identify causal impacts we exploit plausibly exogenous variation in fire destruction generated by the interaction between fire outbreak locations and local wind direction and speed immediately after the earthquake. Our econometrics results show that a loss of agglomeration economies as a result of the earthquake had a substantial impact on firms shutting down or relocating, with average effects of 13 and 11 per cent for these outcomes, respectively.

Suggested Citation

  • Tetsuji Okazaki & Toshihiro Okubo & Eric Strobl, 2026. "Agglomeration and Fragility: Firm Responses to the 1923 Great Kanto Earthquake," Working Papers 0309, European Historical Economics Society (EHES).
    • Handle: RePEc:hes:wpaper:0309
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    Keywords

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    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • N95 - Economic History - - Regional and Urban History - - - Asia including Middle East
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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