Natural Disasters and Industrial Production Efficiency: Evidence from Prewar Japan

Preeya Mohan, Toshihiro Okubo and Eric Strobl ()

No 2020-006, Keio-IES Discussion Paper Series from Institute for Economics Studies, Keio University

Abstract: In this paper, we investigate whether destruction due to natural disasters induces industries to increase their production efficiency using the case of prewar Japan, a period of frequent disasters and technological upgrading. To this end, we compile a regional sectoral data set of natural disaster destruction and production for machinery and textiles during the period. We then employ a stochastic frontier analysis (SFA) approach to estimate the role of disaster events on changes in production efficiency. Our results show that earthquakes led to increases in efficiency for both machinery and textiles, although they were substantially greater for textiles due to recovery persisting longer. In contrast, climate-related natural disaster events played no role in production efficiency.

Keywords: Stochastic Frontier Analysis (SFA); Natural Disasters; Production Efficiency; Earthquakes; Inefficiency Scores (search for similar items in EconPapers)
JEL-codes: O47 Q54 R11 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2020-03-01
New Economics Papers: this item is included in nep-eff, nep-env, nep-his and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:keo:dpaper:2020-006

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