Fires and Local Labor Markets

TL;DR

This paper investigates how fires affect US county labor markets using satellite data, revealing that fire exposure reduces employment growth, with effects varying by county characteristics and economic conditions.

Contribution

It introduces a novel satellite-based measure of fire exposure and analyzes its dynamic impact on local labor markets, accounting for heterogeneity across regions and economic states.

Findings

Fire exposure lowers employment growth in the short and medium term.

Medium-term effects are partly driven by migration patterns.

Heterogeneous impacts depend on county education, industrial concentration, and fire size.

Abstract

We study the dynamic effects of fires on county labor markets in the US using a novel geophysical measure of fire exposure based on satellite imagery. We find increased fire exposure causes lower employment growth in the short and medium run, with medium-run effects being linked to migration. We also document heterogeneous effects across counties by education and industrial concentration levels, states of the business cycle, and fire size. By overcoming challenges in measuring fire impacts, we identify vulnerable places and economic states, offering guidance on tailoring relief efforts and contributing to a broader understanding of natural disasters' economic impacts.