The Political Economy of Hurricane Katrina and Community Rebound

The Political Economy of Hurricane Katrina and Community Rebound

New Thinking in Political Economy series

Edited by Emily Chamlee-Wright and Virgil Henry Storr

In 2005 Hurricane Katrina posed an unprecedented set of challenges to formal and informal systems of disaster response and recovery. Informed by the Virginia School of Political Economy, the contributors to this study critically examine the public policy environment that led to both successes and failures in the post-Katrina disaster response and long-term recovery. Building from this perspective, this book lends critical insight into the nature of the social coordination problems disasters present, the potential for public policy to play a positive role, and the inherent limitations policymakers face in overcoming the myriad challenges that are a product of catastrophic disaster.

Chapter 5: Restricting Reconstruction: Occupational Licensing and Natural Disasters

David Skarbek

Subjects: economics and finance, austrian economics, public choice theory, public sector economics, environment, disasters, politics and public policy, public choice


David Skarbek1 INTRODUCTION 5.1 Since the tremendous devastation caused by Hurricane Katrina in 2005, there has been a re-examination of the appropriate response to natural disasters and the determinants of recovery. Past scholarship examined how to best define recovery (Baisden and Quarantelli 1979) and how the social, political, psychological and economic outcomes change because of the length and process of recovery (Quarantelli 1998). Economists have since investigated government’s proper role given knowledge problems (Sobel and Leeson 2006) and the ability of the marketplace to assist or detract from the process (for example, Congleton 2006; Shughart 2006; Waugh and Smith 2006). This chapter investigates the impact of occupational licensing requirements on the recovery process. Shortages created by licensing are costly in normal times, but the social costs are even more burdensome when a large portion of the community suddenly demands the regulated services. Recovery slows due to these rising costs. This chapter examines occupational licensing in Louisiana, which maintained restrictions on roofers, plumbers and electricians after Hurricane Katrina. In contrast, Florida’s policy response reduced licensing requirements for roofers after major storms in 2004 and 2005. Policy delayed recovery in the former and encouraged it in the latter. This chapter also deploys qualitative analysis in order to understand people’s perceptions about choosing between licensed and unlicensed professionals in the wake of a natural disaster. Interview data provide information about how particular individuals interpreted their surroundings and what motivated their choice to use licensed contractors. Theoretically this is crucial, for as Israel Kirzner...

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