Temporal and Heterogeneous Effects of the 2017 Mexico Earthquake on Job Quality and Firm Characteristics: A Panel Data Event Study

Abstract

In 2017, Mexico was struck by the most powerful earthquake since the 1932 Jalisco earthquake. Moving beyond the predominant focus on climatic events and short-term effects in existing literature on disaster impacts, this study provided new evidence on how seismic shocks generated unequal impacts across the labor market in a developing economy. It examined disparities not only across workers and across firm characteristics but also within firms—by legal form, ownership type, informality status, and size—and among workers, based on pre-disaster job quality. Additionally, it captured the temporal dynamics of these effects, distinguishing between those that appeared immediately and those that developed or persisted over time. The empirical strategy was grounded in a panel event study design that integrates difference-in-differences estimation with measures of earthquake exposure. By contrasting treatment definitions based on an exogenous geophysical indicator and official disaster area classifications, the study strengthened causal identification and captured both direct physical shocks and institutional responses. This dual approach contributes to the disaster impact evaluation literature by offering a more comprehensive assessment. The evidence reveals an asymmetry in post-disaster adjustment: firms did not exhibit statistically significant impacts either immediately or over time, while workers appeared to have absorbed the consequences. This suggests that firms may have partially displaced the shock onto their workforce, using adjustment mechanisms associated with declines in job quality among vulnerable workers. The evidence underscores the need to expand post-disaster recovery frameworks beyond physical reconstruction, highlighting the importance of integrating labor rights into resilient and socially inclusive post-disaster strategies, particularly in developing economies.

Keywords

Earthquake / Firms / Impact evaluation / Job quality / Mexico / Panel data event study

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