Emigration and employment impacts of a disastrous earthquake: country of birth matters

ABSTRACT

Two earthquakes in Christchurch, New Zealand, in 2010–11 caused 185 casualties, demolished much of the inner-city and caused significant job losses. We examine one form of adjustment to these outcomes: (international) emigration. Using a difference-in-difference approach, we analyse employment and emigration responses of Christchurch workers relative to matched workers elsewhere. We also examine heterogeneity in responses across subgroups defined by sex, age and country of birth. Significant emigration occurs following the second (more severe) earthquake mirroring job loss patterns. Effects differ by sex and age, and also by country of birth with the foreign-born much more likely to emigrate than the locally born.

KEYWORDS:

• natural disaster
• earthquakes
• migration
• employment
• foreign-born
• Christchurch

JEL:

• J21
• J61
• Q54
• R11

ACKNOWLEDGEMENTS

We thank Statistics New Zealand for supplying and enabling access to the data. We also thank the editor and four referees for insightful comments on an earlier draft.

DISCLAIMER

These results are not official statistics. They were created for research purposes from the Integrated Data Infrastructure (IDI) and Longitudinal Business Database (LBD), which are carefully managed by Stats NZ. The results are based in part on tax data supplied by the Inland Revenue to Stats NZ under the Tax Administration Act 1994 for statistical purposes. Any discussion of data limitations or weaknesses is in the context of using the IDI and LBD for statistical purposes, and is not related to the data’s ability to support the Inland Revenue’s core operational requirements.

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the authors.

Notes

1. Throughout, ‘emigration’, ‘immigration’ and ‘migration’ refer to cross-border flows, unless explicitly stated otherwise.

2. The New Zealand Treasury (2015) estimated that total investment associated with the rebuild would represent around one-fifth of the country’s annual gross domestic product (GDP).

3. The March 2006 census was the most recent census before the earthquakes. Over the period 2006–10, annual immigration as a proportion of the population remained stable, varying between 1.9% and 2.1%; the annual emigration proportion was also moderately stable, varying between 1.5% and 1.9% (New Zealand Productivity Commission (NZPC), 2022, figs 2.8–2.9). Hence, the earthquakes followed a stable period for migration. Fabling et al. (2022) estimate that, in 2009, migrants accounted for 28% of aggregate full-time-equivalent labour input, with two-thirds of that share being attributable to non-Australian migrants who had lived in New Zealand for at least five years. The share of immigrants on temporary (student, visitor or work) visas rose from an average of 72% of all immigrants over 2003–06 to 79% over 2007–10 (NZPC, 2022, fig. 2.11), potentially reducing recent migrants’ attachment to New Zealand in the lead up to the earthquakes. Temporary migrants do not have the same eligibility for social security payments as do permanent migrants so are more exposed to a negative employment shock.

4. The Christchurch population grew by 8.8% in the decade to 2006.

5. duPont et al. (2015) show that population dynamics varied depending on proximity to the centre of Kobe. duPont and Noy (2015) show that the downturn in Kobe City lasted for at least 10 years.

6. Groen and Polivka (2008), Vigdor (2007) and Zissimopoulos and Karoly (2010) use data on small samples of evacuees to examine impacts one year after the disaster.

7. Deryugina et al. (2018) do not differentiate between internal and international flows.

8. While these countries are referred to as ‘neighbouring’ countries, New Zealand’s closest neighbour is almost 2000 km distant.

9. New Zealand immigration rules favour younger migrants, so older foreign-born residents are likely to have lived in New Zealand for a longer period.

10. The public sector is excluded to focus on workers in firms at risk of closure or substantial job loss. Public sector jobs that workers subsequently move to post-earthquake are included in the employment outcome measure.

11. Job retention is measured as conditional on being in a job.

12. ‘Christchurch’ is defined as being within Christchurch City, Waimakariri District and Selwyn District; ‘Wellington’ is defined as being within Wellington City, Porirua City, Lower Hutt City and Upper Hutt City; and ‘Hamilton’ is defined as Hamilton City.

13. Detailed placebo test results are available from the authors upon request, but are excluded here for brevity.

14. We cannot match on all available characteristics since any individual will inevitably differ from another person according to at least one characteristic; hence, we match on what we consider to be the most important criteria and then control for other characteristics.

15. ACC payments are worker compensation payments for injuries, received from the Accident Compensation Corporation.

16. Maré et al. employ a two-way fixed-effects model, including controls for year and worker age by gender. The average (FTE-weighted) contribution of observed worker characteristics is included as a firm-level control, as is the average worker’s ‘skill’ level and the firm fixed effect.

17. Firms are enterprises with longitudinal identifiers repaired following Fabling (2011).

18. Given the large number of coefficients estimated for each month’s equation, the results are not reported for the control variables.

19. For these estimates, the base period for matching becomes July 2009, two months before the first month’s estimates. The difference in base periods between the graphical results and the subsequent tabular results (for which the base period is July 2010) produces fractional changes in estimated timing and magnitude of peaks and troughs in responses. These changes are likely due to the fact that starting the analysis earlier means some treated/control individuals had migrated internally in the additional year leading up to the earthquakes.

20. ‘Young’ is defined as aged less than 26 years, ‘prime-age’ as aged 26–50 years and ‘older’ as aged more than 50 years in the base period.

Additional information

Funding

This work was funded by the Ministry of Business, Innovation & Employment’s (MBIE) Natural Hazards Research Platform and GNS Science.