Gone with the Flood: Natural Disasters, Selective Migration, and Media Sentiment

Abstract

This paper investigates the impact of floods on inter-county migration, using the 2006-2019 Integrated Public Use Microdata Series of the American Community Survey. Exploiting variations in flood timing as a quasi-natural experiment, we use a difference-in-differences method to show that floods cause 2.7% and 1.9% increases in outflow and inflow migration, respectively. They trigger younger, better-educated, and employed residents out of, and attract older, less-educated, and unemployed ones into affected counties. Such patterns can be amplified by media sentiment on flood risks. The selective migration induces decreases in housing prices and increases in housing rent, respectively, suggesting a structural change in the housing markets of flood-prone regions. A back-of-envelope calculation shows net annual losses of $9.3 million and $1.98 million due to flood-induced selective migration, conditional on education and age profiles, respectively. Our results shed light on how information provision interacts with migration incentives in wake of natural disasters.

Keywords: flood, migration, information nudge, replacement effect, residential location choice

JEL Classification: Q54, R23, D83