Abstract
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.
| Original language | English |
|---|---|
| Pages (from-to) | 373-408 |
| Number of pages | 36 |
| Journal | Journal of Economic Geography |
| Volume | 19 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - 2019 Mar 1 |
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Keywords
- Earthquake
- natural disaster
- productivity
- survival analysis
ASJC Scopus subject areas
- Geography, Planning and Development
- Economics and Econometrics
Cite this
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.
In: Journal of Economic Geography, Vol. 19, No. 2, 01.03.2019, p. 373-408.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Natural disasters and spatial heterogeneity in damages
T2 - The birth, life and death of manufacturing plants
AU - Cole, Matthew A.
AU - Elliott, Robert J.R.
AU - Okubo, Toshihiro
AU - Strobl, Eric
PY - 2019/3/1
Y1 - 2019/3/1
N2 - 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.
AB - 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.
KW - Earthquake
KW - natural disaster
KW - productivity
KW - survival analysis
UR - http://www.scopus.com/inward/record.url?scp=85062960477&partnerID=8YFLogxK
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U2 - 10.1093/jeg/lbx037
DO - 10.1093/jeg/lbx037
M3 - Article
VL - 19
SP - 373
EP - 408
JO - Journal of Economic Geography
JF - Journal of Economic Geography
SN - 1468-2702
IS - 2
ER -