Labour Market Dynamics Following a Regional Disaster

Motu Working Paper 16-07

52 Pages Posted: 19 May 2016

See all articles by Richard Fabling

Richard Fabling

Ministry of Economic Development - Medium Term Strategy Group

Arthur Grimes

Motu Economic and Public Policy Research Trust

Levente Timar

Motu Economic and Public Policy Research Trust; GNS Science

Date Written: May 19, 2016

Abstract

The 2010/2011 Canterbury earthquakes caused major upheaval to the people of the region. The second major quake killed 185 people, forced many from their homes, and closed Christchurch’s central business district. This paper examines the consequential effect on jobs and accumulated earnings for workers in Canterbury. In addition, we examine concurrent decisions about employment location, including job-to-job transitions and regional migration. While Canterbury workers’ employment outcomes were adversely affected in the short-run, those workers were more likely to have jobs three years later (relative to a matched control group), and to have higher accumulated earnings. At the same time, they were less likely to be at the same employer, and more likely to have migrated to jobs in other New Zealand regions. Impacts vary substantially by worker characteristics and by the naturally-induced geographic variation in the severity of the shock. We show that the Earthquake Support Subsidy appears to have influenced the extent of outward migration decisions, at least for most types of workers, though not the long-term retention of the pre-quake job under which the subsidy was gained. We interpret these findings as evidence that the subsidy achieved its goal of delaying involuntary job loss and, as a result, fewer workers made immediate decisions to leave the region – decisions that persisted over the long-run.

Keywords: Natural Disasters, Employment, Migration, Response to Shocks, Difference-In-Difference

JEL Classification: D22, L11, Q54

Suggested Citation

Fabling, Richard and Grimes, Arthur and Timar, Levente, Labour Market Dynamics Following a Regional Disaster (May 19, 2016). Motu Working Paper 16-07 . Available at SSRN: https://ssrn.com/abstract=2781769

Richard Fabling (Contact Author)

Ministry of Economic Development - Medium Term Strategy Group ( email )

P.O. Box 1473
Wellington
New Zealand

Arthur Grimes

Motu Economic and Public Policy Research Trust ( email )

19 Milne Terrace
Island Bay
Wellington 6002
New Zealand

Levente Timar

Motu Economic and Public Policy Research Trust ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand

GNS Science ( email )

1 Fairway Dr
Avalon
Lower Hutt
New Zealand

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