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How Hurricanes Affect Employment and Wages in Local Labor Markets

Author

Listed:
  • Belasen, Ariel R.

    (Southern Illinois University Edwardsville)

  • Polachek, Solomon

    (Binghamton University, New York)

Abstract

This paper adopts a generalized-difference-in-difference (GDD) technique outlined in Ariel R. Belasen and Solomon W. Polachek (IZA Discussion Paper #2976) to examine the impact of hurricanes on the labor market. We find that earnings of the average worker in a Florida county rises over 4% within the first quarter of being hit by a major Category 4 or 5 hurricane relative to counties not hit, and rises about 1¼% for workers in Florida counties hit by less major Category 1-3 hurricanes. Concomitantly, employment falls between 1½ and 5% depending on hurricane strength. On the other hand, the effects of hurricanes on neighboring counties have the opposite effects, moving earnings down between 3 and 4% in the quarter the hurricane struck. To better examine the specific shocks, we also observe sectoral employment shifts. Finally, we conduct a time-series analysis and find that over time, there is somewhat of a cobweb with earnings and employment rising and falling each quarter over a two-year time period.

Suggested Citation

  • Belasen, Ariel R. & Polachek, Solomon, 2008. "How Hurricanes Affect Employment and Wages in Local Labor Markets," IZA Discussion Papers 3407, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp3407
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    References listed on IDEAS

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    1. Paulo Guimaraes & Frank L. Hefner & Douglas P. Woodward, 1993. "Wealth And Income Effects Of Natural Disasters: An Econometric Analysis Of Hurricane Hugo," The Review of Regional Studies, Southern Regional Science Association, vol. 23(2), pages 97-114, Fall.
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    Keywords

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    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J49 - Labor and Demographic Economics - - Particular Labor Markets - - - Other
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • 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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