EconPapers    
Economics at your fingertips  
 

Socio-economic effects of an earthquake:does sub-regional counterfactual sampling matter in estimates? An empirical test on the 2012 Emilia-Romagna earthquake

Margherita Russo () and Francesco Pagliacci ()

Center for the Analysis of Public Policies (CAPP) from Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi"

Abstract: Estimates of macroeconomic effects of natural disaster have a long tradition in economic literature (Albala-Bertrand, 1993a; 1993b; Tol and Leek, 1999; Chang and Okuyama, 2004; Benson and Clay, 2004; Strömberg, 2007; UNISDR, 2009; Cuaresma, 2009; Cavallo and Noy, 2009; Cavallo et al., 2010; The United Nations and The World Bank, 2010). After the seminal contribution of Abadie et al. (2010) in identifying synthetic control groups, with DuPont and Noy (2015) a new strand has been opened in estimating long term effects of natural disaster at a sub-regional scale, at which the Japan case provides plenty of significant economic variables. Although the same methodology has been applied in estimating the impact of earthquakes in Italy (Barone et al. 2013; Barone and Mocetti, 2014), the analysis has been limited to the regional scale. In our paper, due to a lack in long-term time series data at municipality level, this paper cannot adopt the methodology suggested by Abadie et al. (2010). Nevertheless, it provides a test bed for assessing the relevance of a sub-regional counterfactual evaluation of a natural disaster's impact. By taking the 2012 Emilia-Romagna earthquake as a case study, we propose a comprehensive framework to answer some critical questions arising in such analysis. Firstly, we address the problem of identifying the proper boundaries of the area affected by an earthquake. Secondly, through a cluster analysis we show the importance of intra area differences in terms of their socio-economic features. Thirdly, counterfactual analysis is assessed by adopting a pre- and post-earthquake difference-in-difference comparison of average data in clusters within and outside the affected area. Moreover, three frames to apply propensity score matching at municipality level are also adopted, by taking the control group of municipalities (outside the affected area): (a) within the same cluster, (b) within the same region, (c) in the whole country. The four variables considered in the counterfactual analysis are: total population; foreigner population; total employment in manufacturing local units; employment in small and medium-sized manufacturing local units (0 to 49 employees). All the counterfactual tests largely show a similar result: socio-economic effects are heterogeneous across the affected area, where some clusters of municipalities perform better, in terms of increase of population and employment after the earthquake, against some others. This result sharply contrasts with the average results we observe by comparing the whole affected area with the non-affected one or with the entire region.

Keywords: cluster analysis; counterfactual analysis; Emilia-Romagna; earthquake (search for similar items in EconPapers)
JEL-codes: C38 R11 R58 (search for similar items in EconPapers)
Pages: pages 27
Date: 2016-04
New Economics Papers: this item is included in nep-cse, nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://155.185.68.2/campusone/web_dep/CappPaper/Capp_p139.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mod:cappmo:0139

Access Statistics for this paper

More papers in Center for the Analysis of Public Policies (CAPP) from Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi" Contact information at EDIRC.
Bibliographic data for series maintained by Sara Colombini ().

 
Page updated 2021-02-21
Handle: RePEc:mod:cappmo:0139