The lasting effects of fires on local labor markets
The lasting effects of fires on local labor markets
Our latest Economic Pulse check-in is a closer look at the long-term effects of fires on local economies. Our eyes alone tell us a lot about what the terrible California wildfires are doing to employment, as people struggle to find shelter. But what about job creation even years out from the incidents?
We have someone now who has studied this, and published in the Journal of Environmental Economics and Management. Raphaelle Gauvin-Coulombe is co-author of new research, and she’s a professor of economics at Middlebury College. She spoke with “Marketplace Morning Report” host David Brancaccio and the following is an edited transcript of their conversation.
David Brancaccio: There’s clearly disruption in the near term. That, almost, is obvious, right?
Raphaelle Gauvin-Coulombe: Yes, and we do find effects that last about three years after the fires. And we do find that an increase in fire exposure leads to a decline in employment growth that can last for about three years after the fire.
Brancaccio: And, it’s not that the business burned down and couldn’t hire. You think it has to do with flows of potential labor?
Gauvin-Coulombe: So, part of it is evidence of a shrinking labor force, because we see evidence that some people decide to migrate. But of course, we can imagine that some businesses are also demanding less workers in response to fires, especially in industries like services and tourism.
Brancaccio: But, professor, what about federal disaster aid, when FEMA comes in? I mean, that’s been shown in other disasters to be perversely a kind of economic positive with all the rebuilding.
Gauvin-Coulombe: And that’s exactly right. So if we look only at fires that receive a FEMA disaster declaration, which is a small portion of fires — and here, it’s important to note that a FEMA disaster declaration is a precondition for a wide range of federal assistance programs. So when we look at only the fires that got this disaster declaration, then we do not see any negative economic effects of fires.
Brancaccio: In other words, the federal money mutes the economic impact. And, in fact, you don’t see job creation go down.
Gauvin-Coulombe: Exactly. It’s able to offset the effect on both employment and migration.
Brancaccio: All right, now, for communities that don’t get a disaster declaration — and for many fires and sometimes other disasters, you don’t get one — other lessons for local communities, counties, states in your data about how to somehow compensate for the possibility that people will leave and that therefore jobs will leave?
Gauvin-Coulombe: That’s a difficult question. What we do find is that some communities tend to be more robust, even if they don’t receive financial aid, and that’s because some communities are more diversified economically, or have a more educated workforce. So we find that these communities are much more resilient against the economic effects of fires.
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