Christoph Albert, Paula Bustos, Jacopo Ponticelli, 26 November 2021

There are still significant gaps in our understanding of how climate change affects economic outcomes. This column uses new data on extreme weather events in Brazil to study their impact on labour and capital reallocation across regions, sectors, and firms. Long periods of excess dryness lead to the reallocation of capital and labour away from affected regions. Excess dryness over the last two decades has also changed the structure of the economy – not only in directly affected areas, but also in regions that were integrated with them via labour and capital markets.

Alexandra Avdeenko, Onur Eryilmaz, 03 August 2021

Sudden floods across Central Europe have led governments to initiate bailouts, putting decades-old debates on how to respond to future natural disasters back on the policy agenda. Using a representative longitudinal dataset, this column provides evidence that the 2013 floods in Germany reduced willingness to take risks among men living close to the flooded areas, but had no such effect on women. It also finds that affected households were significantly more likely to hold life insurance after the floods. The findings suggest that a portion of the costs associated with natural disasters is likely to be internalised by households at risk, with implications for governments seeking to provide incentives for household-level adaptation measures such as insurance or better building standards. 

Events

CEPR Policy Research