Belasen, Ariel R., and Solomon W. Polachek. 2009. “How Disasters Affect Local Labor Markets: The Effects of Hurricanes in Florida.” Journal of Human Resources 44(1): 251–276.
This study improves upon the Difference in Difference approach by examining exogenous shocks using a Generalized Difference in Difference (GDD) technique that identifies economic effects of hurricanes. Based on the Quarterly Census of Employment and Wages data, worker earnings in Florida counties hit by a hurricane increase up to 4 percent, whereas earnings in neighboring counties decrease. Over time, workers experience faster earnings and slower employment growth than workers in unaffected counties. Hurricanes have a greater impact in coastal and Panhandle counties, and powerful hurricanes have greater economic effects than weaker ones. Further, the GDD technique is applicable to analyze a wider range of exogenous shocks than hurricanes.
Ariel R. Belasen is an assistant professor of economics and finance at Southern Illinois University in Edwardsville, Ill. Solomon W. Polachek is a distinguished professor of economics at the State University of New York at Binghamton. All data contained in this paper will be made available upon request. The authors would like to thank Joel Elvery, Christopher Hanes, Kajal Lahiri, and Stan Masters along with the seminar participants at: SUNY Albany; SUNY Binghamton; the Third Migrant IZA Conference, Washington, D.C. March 2007; and the Twelfth Society of Labor Economists Meetings, Chicago, May 2007 for their comments.