Urban redevelopment and residential location choice: Evidence from a major earthquake in Japan

Abstract

We examine residential location choice behavior in a metropolitan area of Japan that experienced seismic damage. We find that the internal structure of the affected area was reshaped, although, in the long term, its total population size was robust to this temporary shock. Before the earthquake, the population was evolving toward a state of equilibrium with dense locations in the core facing redevelopment barriers and, therefore, stagnation. In contrast, the periphery was becoming increasingly appealing and thus growing. Seismic damage allowed for redevelopment at higher density, making the adjusted equilibrium with dense locations grow again. In summary, the initially expanding periphery stagnated as an unintended consequence of urban redevelopment.

What future for history dependence in spatial economics?

“…Since Davis and Weinstein (2002), a sizable literature documents the importance of locational fundamentals (Bosker et al, 2013;Bakker et al, 2020a) and mean reversion in growth rates following localized shocks (Glaeser and Shapiro, 2002;Brakman, Garretsen, and Schramm, 2004;Beeson and Troesken 2006;Miguel and Roland, 2011;Cuberes and Gonzales-Val, 2017;Jedwab, Johnson, and Koyama, 2019;Xu and Wang, 2019). 7 Taken together, this evidence seems to confirm the primacy of nature as a factor determining spatial structure.…”

“…An under-examined question in this literature is the extent of government, through coordination or direct investment, in supporting the post-shock recovery Xu and Wang (2019). document significant government investment in neighborhoods damaged by the Hanshin earthquake of 1995.8 In a similar vein, Jedwab, Kerby and Moradi (2017) find that post-colonial Kenyan cities persist in relative size following the loss of railway access Bakker et al (2020b).…”

Earthquakes, grants, and public expenditure: How municipalities respond to natural disasters

“…Although earthquake shocks provide the opportunity to reorganize economic activities and foster urban development (Xu & Wang, ), this opportunity is channeled through the efficient use of resources. Our evidence suggests a more efficient recovery in northern municipalities which allows both personal income and housing prices to grow faster than if no earthquake would have occurred, as suggested by Barone and Mocetti ().…”

“…Other studies focus on the impact of natural disasters on economic growth and show that economic gains are context related (e.g., Barone & Mocetti, ; Cavallo, Galiani, Noy, & Pantano, ; Skidmore & Toya, ). Damages from natural disasters may provide the opportunity to reorganize economic activities in affected areas and, therefore, to foster urban development (Xu & Wang, ). However, areas with better predisaster socioeconomic conditions are more capable to exploit this opportunity as compared to areas with worse predisaster conditions (Bondonio & Greenbaum, ).…”

Natural hazard information and migration across cities: evidence from the anticipated Nankai Trough earthquake

“…Most previous studies focus on "reactive" migration-i.e., migration responses after observed disaster events. For example, previous studies examine the impact of earthquakes (Xu and Wang 2019), flooding (Boustan et al 2012;Gray and Mueller 2012;Husby et al 2014), and hurricanes (Myers et al 2008;Loebach 2016; Deryugina 2017) on subsequent migration and population changes. A general finding in these studies is that disasters tend to increase net migration away from disaster-stricken areas, partly due to changing risk perception toward similar incidents in the future.…”