Shaking Up the Equilibrium: Natural Disasters, Immigration and Economic Geography

33 Pages Posted: 26 Oct 2015

See all articles by Philipp Ager

Philipp Ager

University of Southern Denmark - Department of Business and Economics; Centre for Economic Policy Research (CEPR)

Casper Worm Hansen

University of Copenhagen - Department of Economics; University of Copenhagen

Lars Lønstrup

University of Southern Denmark - Department of Business and Economics

Date Written: October 23, 2015

Abstract

This paper investigates the effects of a large temporary shock on the agglomeration of economic activity. Using variation in the potential damage intensity of the 1906 San Francisco earthquake across counties in the American West, we find that the earthquake persistently decreased various measures of economic activity, such as population size and total wage expenditures. The main reason for this long-lasting effect is that the earthquake changed the location choice of migrants, who decided to settle in less affected areas of the American West. Our findings suggest that a large temporary shock can have a persistent effect on the location of economic activity.

Keywords: Natural Disasters, Economic Development, Location of Economic Activity, Immigration

JEL Classification: N9, O15, O40, R11, R12

Suggested Citation

Ager, Philipp and Hansen, Casper Worm and Lønstrup, Lars, Shaking Up the Equilibrium: Natural Disasters, Immigration and Economic Geography (October 23, 2015). Univ. of Copenhagen Dept. of Economics Discussion Paper No. 15-17. Available at SSRN: https://ssrn.com/abstract=2680089 or http://dx.doi.org/10.2139/ssrn.2680089

Philipp Ager (Contact Author)

University of Southern Denmark - Department of Business and Economics ( email )

DK-5230 Odense
Denmark

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Casper Worm Hansen

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5
Copenhagen K, DK 1153
Denmark

University of Copenhagen ( email )

Nørregade 10
Copenhagen, København DK-1165
Denmark

Lars Lønstrup

University of Southern Denmark - Department of Business and Economics ( email )

HOME PAGE: http://www.sdu.dk/staff/loe.aspx

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