Socioeconomic effects of an earthquake: does spatial heterogeneity matter?

Estimation of the macroeconomic effects of an earthquake critically depends on the identification of the affected area's boundaries, socioeconomic local heterogeneity and proper counterfactual analysis. By taking the 2012 Emilia-Romagna earthquake (Italy) as a case study, this paper answers these questions in a sub-regional framework. Cluster analysis tackles the heterogeneity issue, returning different types of affected municipalities. A difference-in-differences analysis then suggests that, since 2012, some clusters (and some municipalities within them) have performed better than others. This contrasts with the results observed by comparing the whole affected area with the non-affected one, with implications for both policy interventions and the recovery processes.