Disaster-induced migration and local labor markets: Heterogeneous effects by skill level and industry structure
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.
Authors
- Harvey Cutler (ORCID: https://orcid.org/0000-0002-4176-9815)
- Yuchen Hu (ORCID: https://orcid.org/0000-0002-0740-6551)
- Qiaoyan Luo
- Yihua Mao
Institutions
- Wuxi University (CN)
- Zhejiang University (CN)
- Colorado State University (US)
Publication Details
- Journal
- PLoS ONE
- Published
- 2026-10-27
- DOI
- https://doi.org/10.1371/journal.pone.0346313
- Primary Topic
- Migration and Labor Dynamics
- Type
- article
- Field-Weighted Citation Impact
- 0.00