Middle-class flight from post-Katrina New Orleans: A theoretical analysis of inequality and schooling

Abstract

We present a model of urban resilience where the pattern of disaster recovery is defined by forcibly evacuating the population of a city and then allowing people to return voluntarily. The model predicts the post-disaster population composition of a city, changes in its income distribution and citizen welfare, and changes in the level of public goods. Plausible ex-ante assumptions about urban characteristics lead to a post-disaster city that is smaller, more skill-intensive, and with higher mean educational attainment. The evolution of income inequality is more complex, even though unskilled wages rise, middle-class flight may cause income distribution to worsen. The analysis of disasters’ long term impact on fiscal structure and on demographic, income, and human capital distribution, illustrates the interplay of major determinants of resilience after a natural disaster. A stylized New Orleans around the time of its 2005 Katrina disaster is incorporated for realism and used as an example throughout. Predicted changes are broadly consistent with observed effects of Katrina on New Orleans.