Taken by Storm: Business Survival in the Aftermath of Hurricane Katrina
University of Missouri - Department of Economics; U.S. Census Bureau - Center for Economic Studies
U.S. Census Bureau - Center for Economic Studies
March 30, 2014
We use Hurricane Katrina's damage to the Mississippi coast in 2005 as a natural experiment to study business survival in the aftermath of a cost shock. We find that damaged establishments that returned to operation were more resilient than those that had never been damaged. This effect is particularly strong for establishments belonging to younger and smaller firms. The effect of damage on establishments in older and larger chains was more limited, and they were subsequently less resilient having survived the damage. These selection effects persist up to five years after the initial shock. We interpret these findings as evidence that the effect of the shock is tied to the presence of financial and other constraints.
Number of Pages in PDF File: 45
Keywords: Retail, chain, credit constraints, hurricane, Katrina, natural disaster, exit
JEL Classification: D22, L11, L81, L83, Q54working papers series
Date posted: March 31, 2014
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