State-Wide Effects of Natural Disasters on the Labor Market

Some scientific evidence predicts that extreme weather events are becoming more frequent and more violent. While this is debatable, there is a general consensus that the socioeconomic harm (such as lost aggregate output) caused by natural disasters is substantial and escalating. Conversely, the effects of natural disasters on specific economic sectors such as the labor market are still largely unknown. In the absence of such evidence, this article tends to draw on principles of the post-Keynesian theory of growth and distribution to propose a framework for capturing labor market response to devastating natural disasters. Consequently, the fundamental objective of this chapter is to explore the links through which natural disasters affect regional labor market using time series methods and estimation techniques.