In this paper, the case of the 1995 Hanshin–Awaji Earthquake is analyzed with the intention of being able to better forecast the long-term structural changes that may occur in areas destroyed by the Great East Japan Earthquake in 2011. However, there are some limitations to using the Hanshin–Awaji Earthquake case. First, the two earthquakes differed in terms of the subsequent disasters. Although the Hanshin–Awaji Earthquake caused fires that destroyed many houses, the Great East Japan Earthquake created a 15-meter tsunami and the nuclear plant incident. Second, the disaster areas destroyed by the two earthquakes differed in their industrial characteristics. Whereas the Hanshin–Awaji Earthquake damaged mainly a manufacturing and services industries region, the Great East Japan Earthquake devastated a region where the majority of workers were employed in the fishery and agricultural industries. Finally, the disaster areas differ in terms of the population distribution by age. There was a relatively large older population in the Tohoku area when the Great East Japan Earthquake struck, whereas there was a relatively large younger population in the Hanshin area in 1995. However, analyzing the Hanshin–Awaji Earthquake also has two advantages. The first is that this analysis allows us to examine the long-term impact of an earthquake on people’s lives. Moreover, in terms of the scale of the natural disaster, the Hanshin–Awaji Earthquake was similar to the Great East Japan Earthquake. This will enable us to better predict the long-term effects of the Great East Japan Earthquake on the wage structure and income inequalities in the disaster area. In terms of the second advantage, our paper contributes to the existing literature because, to our knowledge, this is the only reported study that empirically analyzes the long-term effects of a natural disaster on the wage distribution. Although many empirical studies have analyzed the economic effects of natural disasters, most have focused on how natural disasters affect economic growth or consumption behavior at the aggregate level. The effects of natural disasters on the labor market have rarely used micro data. In this regard, our analysis of the relationship between the earthquake and the wagedistribution may provide a foundation for future studies assessing the impact of natural disasters on the accumulation of human and health capital.

Read More