Labor market adjustment to extreme heat shocks: Evidence from Brazil

Victoria Wenxin Xie

Journal of Economic Behavior & Organization, 2024, vol. 222, issue C, 266-283

Abstract: Despite ample evidence on the labor productivity impact of heat shocks, little is known about how heat shocks affect labor adjustment over time. This paper uses administrative employer–employee linked data from Brazil to examine margins of labor market adjustment to extreme heat. Tracking workers over time and across job spells, I find that quarterly heat shocks increase the probability of formal manufacturing layoffs. In the medium run, there is limited intersectoral and interregional reallocation, as well as a significant failure rate to reallocate back to formal sectors, indicating job transitional costs. Finally, the employment impact of heat shocks is larger for workers in more routine manual task intensive, less abstract occupations.

Keywords: Labor market adjustment; Transitional costs; Extreme weather (search for similar items in EconPapers)
JEL-codes: F18 J24 J30 Q54 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:222:y:2024:i:c:p:266-283

DOI: 10.1016/j.jebo.2024.04.017

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