How to Integrate Labor Disruption into an Economic Impact Evaluation Model for Postdisaster Recovery Periods

Zhengtao Zhang, Ning Li, Peng Cui, Hong Xu, Yuan Liu, Xi Chen and Jieling Feng

Risk Analysis, 2019, vol. 39, issue 11, 2443-2456

Abstract: Evaluating the economic impacts caused by capital destruction is an effective method for disaster management and prevention, but the magnitude of the economic impact of labor disruption on an economic system remains unclear. This article emphasizes the importance of considering labor disruption when evaluating the economic impact of natural disasters. Based on the principle of disasters and resilience theory, our model integrates nonlinear recovery of labor losses and the demand of labor from outside the disaster area into the dynamic evaluation of the economic impact in the postdisaster recovery period. We exemplify this through a case study: the flood disaster that occurred in Wuhan city, China, on July 6, 2016 (the “7.6 Wuhan flood disaster”). The results indicate that (i) the indirect economic impacts of the “7.6 Wuhan flood disaster” will underestimate 15.12% if we do not consider labor disruption; (ii) the economic impact in secondary industry caused by insufficient labor forces accounts for 42.27% of its total impact, while that in the tertiary industry is 36.29%, which can cause enormous losses if both industries suffer shocks; and (iii) the agricultural sector of Wuhan city experiences an increase in output demand of 0.07% that is created by the introduction of 50,000 short‐term laborers from outside the disaster area to meet the postdisaster reconstruction need. These results provide evidence for the important role of labor disruption and prove that it is a nonnegligible component of postdisaster economic recovery and postdisaster reduction.

Date: 2019
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https://doi.org/10.1111/risa.13365

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Persistent link: https://EconPapers.repec.org/RePEc:wly:riskan:v:39:y:2019:i:11:p:2443-2456

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