An Empirical Study on Long Term Effects of Post Disaster Reconstruction Policies after the 2011 Great East Japan Earthquake

This study investigates the long-term impacts of the 2011 Great East Japan Earthquake on regional economies and employment. Using establishment-level Economic Census data (2009–2021), we document sharp increases in exit rates between 2012 and 2014, especially in coastal municipalities; in zones inundated by more than eight meters of tsunami water, nearly 75% of establishments exited. After 2016, employment recovered more quickly than establishment counts, and new entries in construction, accommodation and food services, and health and welfare contributed to an industrial structure that was distinct from pre-disaster patterns. Exits were concentrated among low-productivity establishments, although some high-productivity firms also disappeared.

We link these data to the registry of firms utilizing the Special Zones for Reconstruction Program and estimate the effects of Articles 37 and 38 using the staggered difference-in-differences method of Sun and Abraham (2021) with microdata from the Basic Survey of Japanese Business Structure and Activities (2010–2019). Article 37 substantially increased current-year tangible fixed asset acquisition and raised tangible fixed asset stocks, indicating sustained capital accumulation, whereas Article 38 had only limited effects on employment and wages.

Overall, the findings indicate a prolonged restructuring process characterized by simultaneous exits and entries. Reconstruction policies stimulated investment but generated only modest labor-market spillovers.