A Dynamic Model of Post-Hurricane Katrina Residential Rebuilding

Jesse Gregory, University of Michigan

This paper examines New Orleans homeowners' post-Hurricane Katrina rebuilding decisions using administrative property assessment data linked to survey responses from the Displaced New Orleans Residents Survey. During the first two years following Katrina, rebuilding occurred slowly and the rate of rebuilding varied greatly by race and education. By the fourth anniversary of Katrina, about three quarters of severely damaged homes had been repaired and disparities across demographic groups in the rate of rebuilding had narrowed substantially. To assess alternative potential explanations for observed rebuilding patterns, I estimate a dynamic discrete choice model of households' decisions regarding migration, home sale/repair, and participation in the government's Road Home rebuilding grant program. I then simulate households’ choices under counterfactual grant policies and labor market conditions to assess the relative importance of Road Home grant payments, labor wage levels across locations, and households’ preferences for locations in shaping households’ post-Katrina migration and rebuilding decisions.