Impacts of Climate Hazards on Employment and Earnings by Hazard Type, Industry, Race, and Ethnicity

We examine the relationship between climate-related disasters and subsequent county-level aggregate employment and earnings. We combine earnings and employment data from 2000 to 2023 with data on disasters to estimate local projection impulse response functions relating extreme disaster events to cumulative percent changes in employment and earnings. On average, disasters appear to reduce employment growth three to five years post disaster. There are small positive impacts on earnings. These results are largely driven by responses to hurricanes and tropical storms. Key rebuilding industries such as construction see short-term gains in employment that turn to losses in the longer-term that are similar to those in other industries. Hispanic and Latino workers see short-term gains in employment in part due to their representation in construction, which again turn to longer-term losses similar to those experienced by other racial and ethnic groups. An analysis of FEMA-supported disasters suggests that FEMA aid may be driving these results.