Middle Class Flight from Post-Katrina New Orleans: A Theoretical Analysis of Inequality and Schooling
This paper stylizes the most salient characteristics of New Orleans' people and the Katrina evacuation and constructs a formal, theoretical model of their decision to return. We use the model to examine the post-Katrina population composition of the city, the evolution in its income distribution and in the welfare of its citizens, and changes in the level of education privately and publicly provided. Our results are, overall, positive for the new New Orleans. While smaller, the new New Orleans is more skill-intensive and education levels improve; these changes are broadly consistent with observed effects of Katrina on New Orleans. Moreover, while the possibility remains that Katrina-like events cause "middle-class flight," inequality is reduced under standard distributional assumptions, such as log-concavity. Nonetheless, the fact that many among the unskilled are unable to return remains problematic from an ethical point of view. Our analysis of a disaster's long term impact on a city through its effects on demographic composition, income and human capital distribution, and fiscal structure elucidates major determinants of urban resilience after a natural disaster.
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