PROPAGATION OF POSITIVE EFFECTS OF POST‐DISASTER POLICIES THROUGH SUPPLY CHAINS

This study evaluates the impact of “group subsidies,” a policy intervention intended to repair and reinstall damaged capital goods and facilities of small‐ and medium‐sized enterprises after the Great East Japan earthquake. Employing a propensity‐score‐matching and difference‐in‐differences approach, we find a positive effect of the subsidies on post‐disaster sales and employment of small recipient firms. We also find a positive indirect effect of group subsidies on firms in disaster‐hit prefectures that did not receive any group subsidy but were linked through supply chains with a recipient firm. Our results indicate the propagation of post‐disaster policy effects through supply chains. ( JEL H20, L14, Q54)