Scandinavian Working Papers in Economics

Discussion Papers of Business and Economics,
University of Southern Denmark, Department of Business and Economics

No 2/2018: Shaking Up the Equilibrium: Natural Disasters, Economic Activity, and Immigration

Philipp Ager (), Casper Worm Hansen () and Lars Lønstrup ()
Additional contact information
Philipp Ager: Department of Business and Economics, Postal: University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark
Casper Worm Hansen: University of Copenhagen, Postal: Denmark
Lars Lønstrup: Department of Business and Economics, Postal: University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark

Abstract: This paper examines the long-run effects on the spatial distribution of economic activity caused by historical shocks. Using variation in the potential damage intensity of the 1906 San Francisco Earthquake across cities in the American West, we show that more severely affected cities experienced lower population growth relative to less affected cities after the earthquake. This negative effect persisted until the late 20th century. The earthquake diverted migrants to less affected areas in the region, which, together with reinforcing dynamic agglomeration effects from scale economies, left a long-lasting mark on the location of economic activity in the American West.

Keywords: Economic geography; Location of economic activity; Migration; Natural disasters

JEL-codes: O15; O40; R11; R12

37 pages, February 12, 2018

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