The Economic Impact of Hurricane Katrina on its Victims: Evidence from Individual Tax Returns

47 Pages Posted: 1 Dec 2014

See all articles by Tatyana Deryugina

Tatyana Deryugina

University of Illinois

Laura Kawano

University of Michigan at Ann Arbor

Steven D. Levitt

University of Chicago; National Bureau of Economic Research (NBER); American Bar Foundation

Date Written: November 2014

Abstract

Hurricane Katrina destroyed more than 200,000 homes and led to massive economic and physical dislocation. Using a panel of tax return data, we provide one of the first comprehensive analyses of the hurricane’s long-term economic impact on its victims. Katrina had large and persistent impacts on where people live; small and mostly transitory impacts on wage income, employment, total income, and marriage; and no impact on divorce or fertility. Within just a few years, Katrina victims’ incomes fully recover and even surpass that of controls from similar cities that were unaffected by the storm. The strong economic performance of Katrina victims is particularly remarkable given that the hurricane struck with essentially no warning. Our results suggest that, at least in this particular disaster, aid to cover destroyed assets and short-run income declines was sufficient to make victims financially whole. Our results provide some optimism regarding the costs of climate-change driven dislocation, especially when adverse events can be anticipated well in advance.

Suggested Citation

Deryugina, Tatyana and Kawano, Laura and Levitt, Steven D., The Economic Impact of Hurricane Katrina on its Victims: Evidence from Individual Tax Returns (November 2014). NBER Working Paper No. w20713. Available at SSRN: https://ssrn.com/abstract=2532294

Tatyana Deryugina (Contact Author)

University of Illinois ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

HOME PAGE: http://deryugina.com

Laura Kawano

University of Michigan at Ann Arbor ( email )

Steven D. Levitt

University of Chicago ( email )

1126 East 59th Street
Chicago, IL 60637
United States
773-834-1862 (Phone)
773-702-8490 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

American Bar Foundation

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Chicago, IL 60611
United States

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