Economic Shocks and Labor Market Flexibility

Simon Franklin and Julien Labonne

Journal of Human Resources, 2019, vol. 54, issue 1, 171-199

Abstract: We test how labor markets adjust to large, but temporary, economic shocks in a context in which such shocks are common. Using an individual-level panel, from 1,140 Philippine municipalities over 26 quarters, we find that workers in areas affected by strong typhoons experience reductions in hours worked and hourly wages, without evidence of layoffs. The results are strongest for formal, wage-paying jobs. We argue that those results are best explained by implicit contracts where workers and firms share risks. We provide extensive qualitative data suggesting that employment contracts in the Philippines allow for such flexibility.

JEL-codes: J22 J30 J41 Q54 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.3368/jhr.54.1.0616.8012R1
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Citations: View citations in EconPapers (9)

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Working Paper: Economic shocks and labor market flexibility (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:uwp:jhriss:v:54:y:2019:i:1:p:171-199

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