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

Regionale Arbeitsmärkte nach einem Erdbeben. Kurzfristige Notfallreaktionen aus länderübergreifender Perspektive. Fälle aus Chile, Ecuador, Italien

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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.

Zusammenfassung

Naturkatastrophen können kurzfristig verschiedene wirtschaftliche Auswirkungen in örtlichen Wirtschaften zur Folge haben. Unser Ziel ist es vorzuzeigen, wie Naturkatastrophen die örtlichen Arbeitsmärkte in drei Ländern beeinflusst haben, welche das letzte Jahrhundert von schweren Erdbeben betroffen waren: Italien (2009 Erdbeben von L’Aquila), Chile (2010 Tsunami-Erdbeben von Concepción), Ecuador (2016 Erdbeben an der Küste von Manabi-Esmeraldas). Die drei Länder weisen eine Mischung aus Heterogenität und Homogenität auf in Bezug auf erkennbare Eigenschaften der Individuen, sozialwirtschaftliche Strukturen der betroffenen Gebieten, institutionelle Faktoren und makroökonomische Eigenschaften, sowie bei der Bereitstellung von Maßnahmen und Finanzierungen der verschiedenen Regierungen für den Wiederaufbau und die Erholung der betroffenen Gebiete. Anhand von drei kurzfristigen Arbeitsumfragen und verschiedenen Regressionsmodellen (Gehaltsschätzungen und ein Differenz in der Differenzschätzung) zeigen wir in Ecuador einen Anstieg des Arbeitseinkommens und der Arbeitsstunden (mittlere) für Männer und Frauen, wobei wir in Italien nur eine Erhöhung der Arbeitsstunden für Frauen fanden, jedoch nicht für Männer. In Chile wurden keine signifikanten Erdbeben Auswirkungen gefunden, weder bei Gehaltseinkommen, noch bei Arbeitsstunden. Unsere Ergebnisse zeigen auf, dass es in einem kurzen Zeitraum schwierig ist, zu beschreiben wie regionaler Märkte funktionieren, Unterschiede und Besonderheiten der jeweiligen Länder können durch die institutionellen Unterschiede, wirtschaftlichen Trends, und die Art der Regierungen auf die Katastrophen zu reagieren, erklärt werden.

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Notes

  1. Understood as resistance and recovery. Diversity (measured in employment) helps the affected counties to return to their path of growth and employment in the long run.

  2. Diversity also improves matching between workers and employees, reduces labor search costs, and increases productive efficiency (Duranton and Puga 2004; Mion and Naticchioni 2009), and it facilitates the inter-industrial transfer of ideas and knowledge (Audretsch 2003; Jacobs 1969).

  3. There will be a mismatch if job seekers are not willing to work in the construction sector, which limits the growth of job placements (in the reconstruction period, job vacancies increase).

  4. Sampling for this survey is done through a rotating panel (2-2-2), so the dwellings surveyed in December 2015 coincide with those surveyed in December 2016 (INEC 2017).

  5. ENEMDU does not investigate Galápagos Islands, but it does include all the other provinces.

  6. The peculiarities of the Italian dataset forced us to identify pre-earthquake panel variables for wages and working hours using a quasi-panel joining (Bruno and Stampini 2009), where the Istat LFS 2008 was matched with the 2009 one.

  7. Five classes: 1 Agriculture, livestock, forestry and fishing (reference category); 2 Construction; 3 Manufacturing, mining and electricity; 4 Wholesale and retail trade, hotels and restaurants, transport and storage; 5 Other activities.

  8. We also tried specifications that included interactions for men and women for robustness.

  9. We consider the working age population in each country.

  10. It is important to note that the separate regressions for males and females do not include the sex dummy, the interaction between economic sector and sex, and the interaction between self-employed dummy and sex.

  11. This is negatively counted in the Index, which is very low for Chile at 25% of GDP, higher and similar for Italy and Ecuador (respectively, 50% and 44% of each GDP).

  12. Official Register (2016).

  13. VAT was raised from 12–14% This increase was a solidarity contribution for seismic areas.

  14. We only took wages >0. We use labor income in current values during the present research.

  15. According with Mair and Wilcox (2019) we reject the null hypothesis (no quantile difference) if p‑value ≤ p-critic.

  16. Except for Ecuador, where the unaffected individuals were in provinces different from Manabí or Esmeraldas.

  17. We refer to yearly descriptive quantile comparisons between affected and unaffected zones. We do not refer to regressions in which is possible to include a variable to capture the earthquake influence in our outcomes.

  18. In Chile the most populated and economically important area is the Metropolitan region (Santiago, the country capital is here). In Ecuador three cities are the most important in terms of population and economic flows: the capital Quito (Pichincha province), Guayaquil (Guayas province) and Cuenca (Azuay province). In Italy the most important cities are the capital (Rome) and those located in the northern side of the country.

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Appendix

Appendix

Table 8 Mincerian regressions and Difference in difference regressions. (Sources: ECUADOR: ENEMDU. Own elaboration, CHILE: CASEN. Own elaboration, ITALY: Source: ISTAT. Own elaboration)
Table 9 Logistic regressions for employment (nonlinear DD). (Source: ISTAT. Own elaboration)

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Mendoza, C.A., Breglia, G. & Jara, B. Regional labor markets after an earthquake. Short-term emergency reactions in a cross-country perspective. Cases from Chile, Ecuador, Italy. Rev Reg Res 40, 189–221 (2020). https://doi.org/10.1007/s10037-020-00144-5

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