Extreme climatic event shocks and employment: empirical evidence from Chinese firms

Shanyong Wang, Ling Ma, Yancheng Lai and Shuainan Zhang

Environment and Development Economics, 2026, vol. 31, issue 4, 320-348

Abstract: Climate change increasingly threatens human development, economic resilience and labour market stability. Using panel data from Chinese A-share listed firms (2007–2021), this study quantifies the employment impacts of extreme temperatures. A one-standard-deviation increase in exposure reduces employment by 0.07 per cent, equivalent to an average loss of 0.0054 workers per firm and 4.36 jobs across the sample. Extreme heat has a stronger effect than cold, with temperature bin analysis showing an average loss of 0.191 workers per firm and 15.565 jobs overall. Mechanism analyses indicate that extreme temperatures heighten operational risks and financial constraints, reducing labour demand. Internal and external buffers are identified: higher wages mitigate employment losses, government subsidies provide external support, while robot adoption and supply chain concentration show limited moderating effects. Heterogeneity analyses reveal greater vulnerabilities in underdeveloped, resource-dependent and climate-sensitive regions. Results emphasize the need for climate-adaptive policies to protect employment amid rising environmental risks.

Date: 2026
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