Natural Disasters, Firm Survival and Growth: Evidence from the Ise Bay Typhoon, Japan

Author: Toshihiro Okubo、Eric Strobl
Date: 2020/2/25
No: DP2020-005
JEL Classification codes: Q54, R10, R12, R14, D22, L25
Language: English
[ Abstract ]

This paper investigates the damage impact of the 1959 Ise Bay Typhoon—the most destructive storm in Japanese history—on firm performance in Nagoya City. To this end, we combine firm-level data with a locally derived damage index measured in terms of the duration of storm surge-induced flooding. We find heterogeneous impacts of flood damage across firms and sectors. More specifically, older manufacturing firms tend to survive and, conditional on survival, longer time inundation moderated their employment and sales growth, but also promoted capital growth, suggesting investment in new machinery and facilities. In contrast, employment growth increased in the construction sector to satisfy the construction demand for rebuilding after the supertyphoon.