Regional labor markets after an earthquake. Short-term emergency reactions in a cross-country perspective. Cases from Chile, Ecuador, Italy

Abstract

Disasters can generate different economic effects in the short run in local economies. Our goal is to reveal how natural disasters reshaped labor markets in three countries that faced massive earthquakes in the past decade: Italy (2009 L’Aquila earthquake), Chile (2010 Concepción earthquake-tsunami) and Ecuador (2016 earthquake in the coast of Manabí and Esmeraldas). These three countries present a mix of heterogeneity and homogeneity in observable characteristics of the individuals, socio-economic structure of the affected areas, institutional factors and macroeconomic characteristics, as well as the actions and budgets allocated by different governments for reconstruction and recovery in the affected areas. Using three short run labor surveys and different regression models (wage estimations and a double difference approach), we show an increase in labor income and worked hours (in average) in Ecuador for males and females, while in Italy we found an increase only in worked hours for females but not for males. In Chile no significant earthquake effects were found, neither in labor income, nor in worked hours. Our results suggest that the short run is critical to describe how regional labor markets will perform, differences and particularities of each country could be explained by institutional differences, economic trends, and how governments responded to their particular catastrophes.