Employment and Self-Employment in the Wake of Hurricane Katrina

Julie M. Zissimopoulos, RAND
Lynn Karoly, RAND

We examine the effects of Hurricane Katrina on the labor market outcomes of prime age individuals in the states most affected by Katrina and for evacuees throughout the United States using data from the monthly Current Population Survey. In Alabama, Florida, and Louisiana, employment and unemployment by the end of 2006 were at similar rates as the end of 2003. In Mississippi, by contrast, employment and unemployment rates in late 2006 had not returned to their pre-Katrina levels. Evacuees that returned to their pre-Katrina state of residence had labor force participation rates and unemployment rates at or near those of non-evacuees. Evacuees that relocated (non-returnees) had lower employment rates and higher unemployment rates immediately following the hurricane and one year later. There is evidence of higher self-employment rates among non-returnees, possibly because of poor wage and salary job prospects or new opportunities for starting businesses in the wake of Katrina.