Natural disasters and economic dynamism: Evidence from U.S. entrepreneurial activity

Abstract

We examine how disaster events influence small business activity in a sample of 48 U.S. states for the period from 1998 to 2018. Our results show that disaster impacts vary by entrepreneurship type; the rate of new entrepreneurs and start-up job creation rise in the aftermath of natural disasters, whereas the opportunity share of new entrepreneurs and start-up survival fall. These findings present a more nuanced understanding of the relationship between natural disasters and entrepreneurial activity than reported in the relevant literature. We interpret our findings in the context of economic dynamism and discuss policy implications.