The Local Economic Impact of Natural Disasters
Brigitte Roth Tran and
Daniel Wilson
No 2020-34, Working Paper Series from Federal Reserve Bank of San Francisco
Abstract:
We use county panel data to study the dynamic responses of local economies after natural disasters in the U.S. Specifically, we estimate disaster impulse response functions for personal income per capita and a broad range of other economic outcomes, using a panel version of the local projections estimator. In contrast to some recent cross-country studies, we find that disasters increase total and per capita personal income over the longer-run (as of 8 years out). The effect is driven initially largely by a temporary employment boost and in the longer run by an increase in average weekly wages. We then assess the heterogeneity of disaster impacts across several dimensions. We find that the longer-run increase in income per capita rises with disaster severity, as measured by monetary damages. Hurricanes, tornados, and fires yield longer run increases in income, while floods do not. The longer run increase in income tends to rise with recent disaster experience and is absent for counties with no recent experience. Finally, a spatial spillover analysis suggests that, while over the short- to medium-run, the regional and local impacts of disasters on personal income are similar, over the longer run the net regional effect may be negative, in contrast to the positive local effect.
Keywords: climate change; Regional economics (search for similar items in EconPapers)
Pages: 61
Date: 2020-11-06
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedfwp:89052
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DOI: 10.24148/wp2020-34
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