Disaster-induced migration and local labor markets: Heterogeneous effects by skill level and industry structure.

Authors

Yuchen Hu, Yihua Mao, Qiaoyan Luo, Harvey Cutler

Published in

PloS one. Volume 21. Issue 10. Pages e0346313. Epub Oct 27, 2026.

Abstract

Natural disasters can trigger large-scale population displacement, resulting in labor market shocks in destination areas. Nonetheless, important aspects of migration-driven shocks remain unclear, particularly how relative inflow intensity, the spatially concentrated inflow of low-skilled migrants, and industry structure moderate these impacts. Using Hurricane Katrina as a natural experiment and a Difference in Difference framework, this study reveals that displacement shock reduces wages in the low-skill localized sector, but this negative impact is heavily characterized by non-linear congestion effects, intensifying sharply from $-0.15 to $-0.27 drop in wage rates when the inflow concentration crosses certain threshold. Decomposing the demand-side channels shows that while the influx stimulates local business creation, this countervailing buffer is economically modest and insufficient to offset the supply-driven wage depression. Furthermore, sectoral mobility and joint wage-setting analyses confirm that low-skill localized and traded industries remain highly segmented in the short run. These findings highlight the importance of accounting for both supply and demand channels, non-linear thresholds, and sectoral frictions to improve regional labor market policies after demographic shocks.

PMID:
42945174
Bibliographic data and abstract were imported from PubMed on 28 Oct 2026.

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