Business closure and relocation: a comparative analysis of the Loma Prieta earthquake and Hurricane Andrew

Abstract

The occurrence of a number of large-scale disasters or catastrophes in recent years, including the Indian Ocean tsunami (2004), the Kashmir earthquake (2005), Hurricane Katrina (2005) and Hurricane Ike (2008), have raised our awareness regarding the devastating effects of disasters on human populations and the importance of developing mitigation and preparedness strategies to limit the consequences of such events. However, there is still a dearth of social science research focusing on the socio-economic impact of disasters on businesses in the United States. This paper contributes to this research literature by focusing on the impact of disasters on business closure and relocation through the use of multivariate logistic regression models, specifically focusing on the Loma Prieta earthquake (1989) and Hurricane Andrew (1992). Using a multivariate model, we examine how physical damage to the infrastructure, lifeline disruption and business characteristics, among others, impact business closure and relocation following major disasters.