Dampening Natural Disasters' Disruptive Effects on Firms and Labor Markets
Despite the growth in evidence on the economic impact of major climate disasters such as hurricanes or earthquakes, there is still a dearth of evidence on disruptions from "day-to-day" climate shocks such as harsher seasonal flooding. As climate change intensifies these regular events, understanding their impact, how governments and firms can invest in mitigation strategies, and how they can handle recovery and reconstruction will be key to preserving functioning labor markets in emerging economies. In Brazil, handling natural disasters is under the purview of municipalities, but they can call on federal funds to support them. This creates a moral hazard problem for mayors: costly investments in disaster preparedness are likely underprovided given an expectation of federal relief funds. This project scopes a potential municipal-level cluster randomized control trial in which we plan to experimentally vary the difference in the payoffs of investment in disaster preparedness.