Working Paper: NBER ID: w20713
Authors: Tatyana Deryugina; Laura Kawano; Steven Levitt
Abstract: Hurricane Katrina destroyed more than 200,000 homes and led to massive economic and physical dislocation. Using a panel of tax return data, we provide one of the first comprehensive analyses of the hurricane’s long-term economic impact on its victims. Katrina had large and persistent impacts on where people live; small and mostly transitory impacts on wage income, employment, total income, and marriage; and no impact on divorce or fertility. Within just a few years, Katrina victims’ incomes fully recover and even surpass that of controls from similar cities that were unaffected by the storm. The strong economic performance of Katrina victims is particularly remarkable given that the hurricane struck with essentially no warning. Our results suggest that, at least in this particular disaster, aid to cover destroyed assets and short-run income declines was sufficient to make victims financially whole. Our results provide some optimism regarding the costs of climate-change driven dislocation, especially when adverse events can be anticipated well in advance.
Keywords: Hurricane Katrina; Economic Impact; Tax Returns; Disaster Relief
JEL Codes: Q54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Hurricane Katrina (H84) | significant and persistent changes in residential patterns (R23) |
| Hurricane Katrina (H84) | wage income decrease (J31) |
| wage income decrease (J31) | wage income recovery (J31) |
| Hurricane Katrina (H84) | unemployment benefits surge (J65) |
| unemployment benefits surge (J65) | return to normal levels (E39) |
| Hurricane Katrina (H84) | non-employment rates surge (J69) |
| non-employment rates surge (J69) | return to normal levels (E39) |
| Hurricane Katrina (H84) | utilization of retirement savings (D14) |
| aid provided to victims (H84) | restoration of financial well-being (G51) |