Keeping in Place After the Storm-Emergency Assistance and Evictions

TL;DR

This paper provides evidence that federal emergency assistance (FEMA) during natural disasters reduces evictions and acts as a liquidity buffer, highlighting its critical role in household financial stability during crises.

Contribution

It demonstrates the impact of FEMA aid on eviction rates and emergency credit markets, revealing its importance as a liquidity buffer during natural disasters.

Findings

FEMA aid reduces eviction rates by approximately 10.9%.

FEMA aid decreases transaction volumes and defaults during hurricanes.

Areas without FEMA aid see less reduction in transaction volumes and similar default rates.

Abstract

We offer evidence that federal emergency assistance (FEMA) in the days following natural disasters mitigate evictions in comparison to similar emergency scenarios where FEMA aid is not provided. We find an approximate 10.9% increase in overall evictions after hurricane natural disaster events driven in large part by areas in close proximity of the hurricane path that do not receive FEMA rental assistance. Furthermore, we also show that FEMA aid acts as a liquidity buffer to other forms of emergency credit, specifically we find that both transactions volumes and defaults decrease during hurricane events in locations that do receive FEMA aid. This effect largely reverses in areas that do not receive FEMA aid, where the magnitude of transaction volumes drop by less and default rates remain similar relative to the baseline. Overall, this suggests that the availability of emergency liquidity during natural disaster events is indeed a binding constraint with real household financial consequences, in particular through our documented channel of evictions and in usage of high-cost credit.