Creative Disasters? Flooding Effects on Capital, Labour and Productivity Within European Firms

This paper examines the impact of floods on the firms' capital accumulation, employment growth, and productivity by using a difference-in-difference (DID) approach and considering the firms' asset structure. We find evidence that, in the short run, companies in regions hit by a flood show on average higher growth of total assets and employment than firms in regions unaffected by flooding. The positive effect prevails for companies with larger shares of intangible assets. Regarding the firms' productivity, a negative flood effect is observable which declines with an increasing share of intangible assets.