Long-term Scarring or Emerging Recovery? The decade-long trajectory of the GEJE

This paper evaluates the long-term economic impacts of the 2011 Great East Japan Earthquake (GEJE) on small and medium-sized enterprises (SMEs). We combine a proprietary firm survey, which measures disaster exposure, with an 18-year panel of financial statements (fiscal 2007--2024), which measures outcomes. Firms that report having experienced the earthquake or tsunami fall durably behind comparable respondents in the scale of their activity and exhibit the following: annual sales among affected firms average roughly a quarter below control firms over the fourteen post-disaster years, the gap widens rather than closes over time, and it persists through 2024 with no sign of reversal. The scarring is concentrated outside the construction sector, where reconstruction demand was not a significant factor. Exposure assigned based on geocoded physical hazard data and maps or from firm location instead of the self-report yields no evidence of scarring, suggesting that location-based measures conflate damage with presence in the reconstruction zone. The findings indicate that post-disaster trajectories unfold over a multi-decadal horizon, which is well beyond standard three-to-five-year policy frameworks.