This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Journal: Macroeconomics
  4. Forthcoming Articles
  5. Expecting Floods: Firm Entry, Employment, and Aggregate Implications

American Economic Journal:
Macroeconomics

ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)

Expecting Floods: Firm Entry, Employment, and Aggregate Implications

  • Ruixue Jia
  • Xiao Ma
  • Victoria Wenxin Xie
American Economic Journal: Macroeconomics (Forthcoming)

Abstract

Using county-level and ZIP-code-level data from the United States during 1998–2018, we document: (1) increased flood risk has a large negative impact on firm entry, employment, and output in the long run; and (2) flood events reduce output in the short run while their impact on firm entry and employment is limited. We then develop a quantitative spatial model to characterize how flood risk shapes firms’ location choices and workers’ employment. We find that flood risk reduced U.S. aggregate output by 0.53% in 2018, 23% of which stemmed from direct damages and 77% from long-run adjustments of firms and workers.

Downloads