Natural Disasters, Local Economic Impacts and Migration: Evidence from the 2004 Tsunami in Sri Lanka

Abstract

We investigate the impacts of the 2004 tsunami on Sri Lanka's labor market using individual-level data. Our findings show a shift from agricultural to service-oriented jobs among those affected by the tsunami. The income levels of these individuals did not decline over the long term. The tsunami also triggered both immediate and sustained migration patterns, and the economic impacts were consistent among both migrants and non-migrants. Our research not only enhances our understanding of how natural disasters can transform labor markets but also suggests policy implications aimed at fostering recovery and resilience in affected communities.