Abstract
Do firms sort in response to hurricane risk? We expand upon standard models of Tiebout sorting for households and explore the effect of hurricanes on firm mobility. Specifically, we examine if firms are more likely to move after experiencing category 3 or higher strength hurricane winds. Using the National Establishment Time-Series (NETS) data for Florida, we find that hurricanes are associated with an increase in the likelihood an establishment moves, especially within the state of Florida. Firms are less likely to move into Florida after a storm, suggesting that the costs of operating within the state change immediately after the storm. We explore various mechanisms that could be driving these results, finding specifically that FEMA assistance reduces mobility and that mobility is more likely due to the initial damage than a change in risk perceptions. Our findings are important for policy-makers as they show that hurricanes impact firm mobility and provide indicators of what is driving the movement after a storm.
