Impacts of the Great East Japan Earthquake on Regional Potentials and Labor Distribution in Miyagi Prefecture

Using a multi-regional new economic geography (NEG) model developed by Ihara, Nakamura and Morita (2012), we investigate the impacts of the Great East Japan Earthquake on regional potentials and labor distribution in Miyagi prefecture. There are 35 cities, and industries are classified into two sectors: agricultural and manufacturing and services. This paper takes a simulation approach, and we first calibrate the main parameters (i.e. the elasticity of substitution and transportation cost levels) and derive the regional potentials. Then we predict the transition of regional potentials and labor distribution caused by the earthquake. Consequently, we show that (i) the Great East Japan Earthquake decreased regional potentials by 10% on average and 20% in the coastal areas; (ii) while the labor population in most of the disaster-stricken cities decreased, that in the city of Sendai increased because of the centricity; (iii) as the recovery progresses, labor moves from inland cities to coastal cities.