Natural Disasters and Self-employment - A New Form of Creative Destruction

Open Access
Author:
Adams, Riley Thomas
Graduate Program:
Agricultural Economics and Demography
Degree:
Master of Science
Document Type:
Master Thesis
Date of Defense:
July 10, 2013
Committee Members:
  • Stephan J Goetz, Thesis Advisor
Keywords:
  • Proprietorship
  • Natural Disaster
  • Self-Employment
  • Creative Destruction
  • FEMA
  • Entrepreneurship
Abstract:
Proprietorship is increasingly becoming a method of providing income in the absence of available wage and salary opportunities as well as providing a means of combating poverty at the county-level. Concurrent with this development, recent natural disasters that now include coastal “superstorms” raise the question of how sole-proprietors are impacted by fundamental labor market shocks, which can be both positive and negative. Of interest are both proprietorship rates and earnings. This paper finds major natural disasters produce negative shocks on proprietorship rate change in the initial period following disaster impact, followed by a positive shift in the medium-term (ranging from 5-6 years following disaster impact) and then a negative turn after 7 years. Major natural disasters produce different results for proprietorship earnings changes. For the initial period of observation, proprietorship earnings are positively impacted by major natural disasters for a period of 4-5 years following impact, and then turn negative from 6-9 years on. When extending this study 9-11 years out from the base year, only proprietorship earnings are impacted positively by major natural disasters. In the face of natural disasters, proprietorship allows impacted communities and those in the surrounding counties to reinvent themselves and restore themselves to prominence (perhaps even assume an upward trajectory of higher levels than previous to the disaster). The time horizon for recovering from natural disasters and their impacts on proprietorship growth deserve study and can provide policy makers valuable information into assessing the appropriate measures to be taken following disasters in restoring proprietorship activity to a region.