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The Unintended Consequences of Post-Disaster Policies for Spatial Sorting

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  • Marcel Henkel, Eunjee Kwon, Pierre Magontier

Abstract

We provide new empirical and theoretical evidence on the spatial consequences of public policies driven by electoral motives. Using exogenous variation in the timing of natural disasters, we show that hurricanes occurring close to Election Day in the United States lead to increased local post-disaster efforts. These electorally motivated measures lead populations to sort into hazard-prone areas. To comprehend the aggregate implications of this sorting pattern, we introduce the relationship between electoral cycles and public policies in a spatial equilibrium model. These electorally motivated policies generate considerable productivity and output losses without being compensated by aggregate welfare gains.

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  • Marcel Henkel, Eunjee Kwon, Pierre Magontier, 2022. "The Unintended Consequences of Post-Disaster Policies for Spatial Sorting," Diskussionsschriften credresearchpaper37, Universitaet Bern, Departement Volkswirtschaft - CRED.
  • Handle: RePEc:rdv:wpaper:credresearchpaper37
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    More about this item

    Keywords

    Natural Disasters; Electoral Cycles; Fiscal Policies; Spatial Sorting;
    All these keywords.

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H84 - Public Economics - - Miscellaneous Issues - - - Disaster Aid
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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