Labor market impacts of destructive California wildfires

The severity and destruction of wildfires in California have increased in magnitude every decade since the late 1900s. Some researchers have studied the impacts of wildfires on people’s health and earnings and on the environment, but few have studied their impacts on the labor market. In this article, I estimate the impacts of destructive wildfires on short-term employment changes by using a generalized difference-in-difference modeling approach with an event-study specification (impacts of an event over time). Although the impacts are small at the overall (cross-industry) level, the analysis of this article shows that specific industries generally had much larger impacts during the analysis period of 2003 through 2021. For example, construction, the most visibly affected industry, had a statistically significant employment growth rates of from 5 percent to 10 percent for at least 18 months postfire. Professional and business services also had significant employment growth rates of up to 5 percent for at least 18 months postfire.