Storms and Jobs: The Effect of Hurricanes on Individuals' Employment and Earnings over the Long Term

78 Pages Posted: 23 Aug 2015 Last revised: 7 Sep 2015

See all articles by Jeffrey Groen

Jeffrey Groen

Bureau of Labor Statistics

Mark J. Kutzbach

Federal Deposit Insurance Corporation

Anne Elise Polivka

Bureau of Labor Statistics

Date Written: August 1, 2015

Abstract

We study the responsiveness of individuals’ employment and earnings to the damages and disruption caused by Hurricanes Katrina and Rita, which struck the U.S. Gulf Coast in 2005. Our analysis is based on individual-level survey and administrative data that tracks workers over time, both in the immediate aftermath of the storm and over a seven-year period. For individuals who were employed at the time of the storm, we estimate models that compare the evolution of earnings for individuals who resided in storm-affected areas and individuals who resided in a set of control counties with pre-storm characteristics similar to those of the storm-affected areas prior to the storm. We find that, on average, the storms reduced the earnings of affected individuals during the first year after the storm. These losses reflect various aspects of the short-run disruption caused by the hurricanes, including job separations, migration to other areas, and business contractions. Starting in the third year after the storms, however, we estimate that the storms increased the quarterly earnings of affected individuals. We provide evidence that the long-term earnings gains experienced by affected individuals were the result of differences in wage growth between the affected areas and the control areas, due to reduced labor supply and increased labor demand, especially in sectors related to rebuilding. Despite short-term earnings losses due to an increased rate of non-employment, we find a net increase in average quarterly earnings among affected individuals over the entire post-storm period. However, subgroups with large and persistent earnings losses after the storms had a net decrease in average quarterly earnings over the seven-year period due to the storms.

Keywords: Disaster, Hurricane, Employment, Earnings, Local Labor Markets, Katrina, Rita

JEL Classification: J6, Q54, R23

Suggested Citation

Groen, Jeffrey A. and Kutzbach, Mark J. and Polivka, Anne E., Storms and Jobs: The Effect of Hurricanes on Individuals' Employment and Earnings over the Long Term (August 1, 2015). US Census Bureau Center for Economic Studies Paper No. CES-WP-15-21. Available at SSRN: https://ssrn.com/abstract=2648980 or http://dx.doi.org/10.2139/ssrn.2648980

Jeffrey A. Groen (Contact Author)

Bureau of Labor Statistics ( email )

2 Massachusetts Avenue, NE
Washington, DC 20212
United States

Mark J. Kutzbach

Federal Deposit Insurance Corporation ( email )

550 17th Street NW
Washington, DC 20006

Anne E. Polivka

Bureau of Labor Statistics ( email )

2 Massachusetts Avenue, NE
Office of Employment Research and Program Development Suite 4945
Washington, DC 20212
United States
(202) 691-7395 (Phone)
(202) 691-7425 (Fax)

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