Rodrigo Valdés, PUC-Escuela de Gobierno

Sala 209

“Local Economic Effects of the Chile 2010 Earthquake”

Coautoreado con Paula Aguirre, Kenzo Asahi, Diego Díaz e Ignacio Riveros

Abstract: We explore the local causal impact of Chile’s 2010 earthquake using a diff-and-diff approach at the municipality level. Chile’s 2010 earthquake is the world’s sixth strongest recorded earthquake. Using a GDP proxy based on VAT collection, a meticulous measure of the local-level shock (compounding peak ground acceleration and the terrain quality at the centroid of urban areas), and baseline controls, we find that the decile of most-heavily affected municipalities suffered a statistically significant and persistent drop between 5% to 10% of their GDP (against no-shake controls). The results are slightly larger in magnitude if we consider GDP-based weighted-least-squares instead of OLS. We also find that municipalities with more precarious constructions that were non-intensive in the use of concrete drive the average relative drop in GDP after the earthquake. If instead of using our shake measure we apply a standard “distance-to-the-epicenter” measure to identify heavily affected municipalities, we find no significant earthquake effects. Pre-earthquake placebo tests are consistent with the assumption of parallel trends of GDP in treated and control areas.