HURRICANES AND LABOR MARKETS: Local Wage and Employment Outcomes Following Major Storms in Texas

Abstract

Damage estimates from natural disasters are on the rise, but physical damage only accounts for part of the economic impact caused by these events. This thesis adds to the literature on such secondary effects via an empirical study of wage and employment outcomes in the wake of hurricanes in Texas. I apply Belasen and Polachek's (2008, 2009) “generalized difference-in-difference” method to isolate these effects, and also to investigate how they change with storm intensity, across industry sectors, and over time. I find that employment growth in affected counties decreases slightly in quarter a hurricane hits, but that there is no significant effect on wages. I also find that ore intense storms tend to produce larger effects, some sectors are impacted more or less than others, and the employment and wage effects may not be as transitory as the literature suggests.