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Short and Long-Term Impacts of a Large-Scale Natural Disaster on Individual Labor Outcomes: Evidence from the 2004 Indian Ocean Tsunami

By Tony sun

Abstract
Natural disasters are often highly disruptive to the livelihoods of impacted populations. This paper investigates the effects of the 2004 Indian Ocean tsunami on male wages and labor supply from its immediate aftermath into the long run. Using fixed effects models that account for individual-specific heterogeneity, I find evidence of significant real wage declines for workers from heavily damaged areas that persist beyond the short-term. This long-term wage effect contrasts with previous literature, particularly in the context of relatively less severe disasters. Male workers also increased their hours-of-work following the tsunami, which suggests reliance on labor markets to smooth income losses and shifted their labor towards less disrupted industries. Additionally, I document the heterogeneity of tsunami impact on wages and hours-of-work by birth cohort and education, as well as by industry and sector of employment.

Professor Duncan Thomas, Faculty Advisor
Professor Michelle P. Connolly, Honors Seminar Instructor

JEL classification: J2; J21; J30; O10; Q54

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Matthew Eggleston
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Director of the Honors Program
Michelle P. Connolly
michelle.connolly@duke.edu