How Hurricanes Affect Employment and Wages in Local Labor Markets

Ariel Belasen () and Solomon Polachek

No 3407, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: sectoral shifts; earnings; local labor market; difference-in-difference estimation; exogenous shock; employment (search for similar items in EconPapers)
JEL-codes: J23 J49 Q54 R11 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2008-03
New Economics Papers: this item is included in nep-geo, nep-lab, nep-ltv and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (99)

Published - published in: American Economic Review, 2008, 98 (2), 49-53

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