| Number |
CREPEDP-56 |
| Publication Date |
June 2019 |
| Title |
Labor Market Dynamics after the Natural Disaster: Evidence from Post-tsunami Aceh Panel Data
|
| Author(s) |
Manabu Nose
|
| Abstract |
Using field survey panel data, this paper estimates the elasticity of labor supply responses to the disaster aid intervention and the lifetime earning effect over seven years after the 2004 Indian Ocean tsunami in Indonesia. Significant extensive margin labor supply responses to labor demand shocks were found resulting from the provision of deficient boats through humanitarian aid and reconstruction programs. The return to fishing spiked high right after the tsunami due to the general equilibrium effect, in consistent with estimated shadow wages, increasing fishing intensity at the intensive margin. Random coefficient panel regression identifies a job selection process, partly driven by learning on unobserved comparative advantage, resulting in a large disparity in lifetime earnings by the job transition sequences. The result suggests that the aid had an unintended consequence in creating welfare costs for job switchers through the labor market adjustment process.
|
| Keywords |
Roy model, labor misallocation, shadow wage, disaster aid, panel data |
| Other information |
Paper in English (47 pages) |