Gales of Creative Destruction: Innovative Governance and Entrepreneurial Development in Post-Katrina New Orleans

This working paper on post-Katrina New Orleans looks at the organic growth of cities.

In this working paper, Sanford Ikeda and Peter Gordon follow Glaeser and Gyourko (2005) in arguing that government programs that help to sustain poverty can establish a lower bound by transforming a declining city into what we call a "welfare city." Their data show that New Orleans has been such a city. Consequently, it was ill-prepared to recover from a large-scale natural disaster and bears some of the blame for regional under-performance. With time and the right institutions in place, especially of the thin-at-the-top variety, New Orleans can re-emerge as a living, entrepreneurial city. They highlight Robert Nelson's concept of the "private neighborhood," which enables local communities to choose the thickness of their own rules, as one such institution.