Full Citation
Title: The Impact of Grants and Wage Subsidies on the Resettlement Choices of Hurricane Katrina Victims
Citation Type: Working Paper
Publication Year: 2011
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Abstract: This paper examines the impact of wage subsidies and direct cash grants on the rebuilding choices of New Orleans homeowners following Hurricane Katrina. I estimate a dynamic discrete choice model of households residential location, home repair, home sale, and borrowing/savingchoices using a unique panel dataset that combines interview responses from the recently fielded Displaced New Orleans Residents Survey with administrative property assessment records from the Orleans Parish Assessors Office. The model finds strong evidence of borrowing constraints among black households and among low income households. Using simulations of households choices under counterfactual grant policies, I estimate that the Louisiana Road Home programs direct cash grants increased the fraction of homes that had been repaired or rebuilt within four years of Katrina by 14%. The program increased rebuilding rates by 18% among black households and by about 8% among non-black households. Also, I estimate that, on the margin, an increase in the amount of a direct grant has about 4.0 times the impact on rebuilding rates as an equal sized increase in the present value of New Orleans wages, and about 5.1 times the impact among black households. These findings suggest that following a disaster, any wageincreases that might result from wage subsidies targeted to businesses are likely to have small effects on households choices relative to direct rebuilding grants paid to households.
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Authors: Gregory, Jesse
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Institution: University of Michigan
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Data Collections: IPUMS USA
Topics: Housing and Segregation, Other
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