Migration and Wages: A Natural Experiment from Hurricane Katrina

28 Pages Posted: 28 May 2009 Last revised: 17 Dec 2009

See all articles by Dakshina G. De Silva

Dakshina G. De Silva

Department of Economics, Lancaster University Management School

Robert P. McComb

Texas Tech University - Department of Economics

Young-Kyu Moh

Texas Tech University

Anita R. Schiller

Department of Economics - Lancaster University Management School

Andres J. Vargas

Texas Tech University - Department of Economics

Date Written: May 27, 2009

Abstract

The objective of this paper is to employ the Hurricane Katrina evacuation into Houston, TX as a natural experiment to estimate the effect of large scale in-migration on regional earnings. Given the characteristics of the evacuees, their influx would have caused the supply of applicants for lower skilled jobs to increase proportionately more than for higher skilled jobs. We utilize a differences-in-differences-in-differences methodology in which we compare differences in average earnings in the low-skill, non-traded goods industries to the corresponding differences in the set of high skill industries in the Houston and Dallas-Fort Worth MSAs before and after the Katrina-induced migration. Unlike previous studies, we include a measure of the post-storm increase in demand for local goods and services on the demand for labor. We find evidence that the relative average payroll in the low-skill non-tradable goods industries in Houston decreased by .7% when compared to the relative change for the same group of industries in Dallas. Our findings also suggest that failure to account for demand-side influences following the migration results in significant under-estimation of wage effects due to the shift in labor supply.

Keywords: Migration, Wages, Labor Demand and Supply, Natural Experiments, Hurricane Katrina, Differences-in-Differences

JEL Classification: J21, J31, J61

Suggested Citation

De Silva, Dakshina G. and McComb, Robert P. and Moh, Young-Kyu and Schiller, Anita R. and Vargas, Andres J., Migration and Wages: A Natural Experiment from Hurricane Katrina (May 27, 2009). Available at SSRN: https://ssrn.com/abstract=1410859 or http://dx.doi.org/10.2139/ssrn.1410859

Dakshina G. De Silva

Department of Economics, Lancaster University Management School ( email )

Lancaster LA1 4YX
United Kingdom

Robert P. McComb

Texas Tech University - Department of Economics ( email )

MS 41014
Lubbock, TX 79409-1014
United States
806 742-2466 x240 (Phone)

Young-Kyu Moh

Texas Tech University ( email )

2500 Broadway
Lubbock, TX 79409
United States

Anita R. Schiller

Department of Economics - Lancaster University Management School ( email )

Lancaster, LA1 4YX
United Kingdom

Andres J. Vargas (Contact Author)

Texas Tech University - Department of Economics ( email )

2500 Broadway
Lubbock, TX 79409
United States

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