Employment dynamics and the Nashville Tornado

This study examines changes in Nashville's labor market following the April 16, 1998 tornado. Specifically, the study focuses on whether or not employment growth experienced a change in mean around the time of the tornado. A time series intervention model that allows for timevarying variance is used to examine the labor market dynamics associated with the impact of the tornado and the ensuing recovery process. The analysis of employment growth is conducted at the aggregate (overall) level as well as for seven industrial sectors. The empirical findings may be summarized as follows. The aggregate Nashville labor market, along with manufacturing, service, transportation and public utilities, and wholesale, retail trade sectors, experienced a more stable employment growth rate in the post-tornado period. Employment in the construction and mining and government sectors exhibited no evidence of change between the pre- and post-tornado periods. Employment growth in the finance, insurance, and real estate sector was lower in the posttornado period than in the pre-tornado period, while employment growth in the transportation and public utilities sector significantly increased in the period following the tornado.