How resilient is the labour market against natural disaster? Evaluating the effects from the 2010 earthquake in Chile

Abstract

Natural disasters are one of the main channels through which ecological and socio-economic systems interact. In particular, the severe impacts of earthquakes could disrupt activities in the labour market. However, the literature barely researched the long-term effects of such events. To investigate this issue, this article is concentrated in Chile that is subject to recurring seismic movements. The 27 February 2010 Bio-Bio Chile earthquake (Mw 8.8) was the second strongest in the history of the country. This natural disaster can be used to evaluate the response of the labour market to an exogenous shock. Besides, the capacity for resilience in the labour market is crucial for people who rely on their job. This document analyses the impacts of the 2010 Bio-Bio earthquake and tsunami on Chilean labour market outcomes, in particular, the quality of employment. With this objective, different data are combined for analysing the effect in the short and long term. Also, distinct econometric techniques and exogenous measurements of seismic acceleration are used. The evidence shows that these catastrophes harmed the labour market in the short term. However, in the long term, the government’s reconstruction efforts and other factors could have attenuated the adverse effects over some variables in the most affected zones.