Natural disasters and spatial heterogeneity in damages: the birth, life and death of manufacturing plants

Cole, Matthew A; Elliott, Robert J R; Okubo, Toshihiro; Strobl, Eric Albert (2019). Natural disasters and spatial heterogeneity in damages: the birth, life and death of manufacturing plants. Journal of economic geography, 19(2), pp. 373-408. Oxford University Press 10.1093/jeg/lbx037

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In this paper, we use the 1995 Kobe earthquake as a natural experiment to examine the impact of a large exogenous physical shock on local economic activity. For the first time we are able to control for local spatial heterogeneity in the damage caused by a natural disaster using geo-coded plant location and unique building-level surveys. In a survival analysis of manufacturing plants, our results show that building-level damage significantly affects a plant’s likelihood of failure and this effect persists for up to 7 years. Further analysis demonstrates that the plants most likely to exit as a result of earthquake damage are the least productive which is suggestive of a cleansing effect as the average productivity rate of the remaining plants increases. We also find that continuing plants experience a temporary increase in productivity following the earthquake consistent with a ‘build back better’ effect. In terms of local regeneration our results indicate that plant births increase in areas with more severe damage consistent with redevelopment plans for Kobe.

Item Type:

Journal Article (Original Article)

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics
10 Strategic Research Centers > Oeschger Centre for Climate Change Research (OCCR)

UniBE Contributor:

Strobl, Eric Albert

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

ISSN:

1468-2702

Publisher:

Oxford University Press

Language:

English

Submitter:

Dino Collalti

Date Deposited:

09 Jul 2019 12:03

Last Modified:

12 Nov 2019 15:48

Publisher DOI:

10.1093/jeg/lbx037

Additional Information:

Published online: 10. November 2017

BORIS DOI:

10.7892/boris.127586

URI:

https://boris.unibe.ch/id/eprint/127586

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