Nature Dependence and Labor Investment Efficiency

Jifeng Hong, Pantelis Kazakis, Steven Ongena and Martin Strieborny
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Jifeng Hong: University of Glasgow
Pantelis Kazakis: University of Glasgow - Adam Smith Business School
Steven Ongena: University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)
Martin Strieborny: University of Glasgow

No 26-58, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: Does dependence on nature distort how firms hire? Using 86,584 firm-year observations from 68 countries over 2010-2024, we show that it does. More naturedependent firms exhibit lower labor-investment efficiency, driven mainly by underhiring. This inefficiency operates through operational and financial frictions: ESG incidents, market undervaluation, and financing constraints. The effect intensifies where social unrest is frequent, populations are aging, production is skill-intensive, and product-market competition is stronger. It weakens under stricter environmental policy, stronger employment protection, and effective government. Nature dependence is therefore not a purely sustainability concern; it is a binding constraint on firms' employment decisions.

Keywords: Nature dependence; Natural capital; Labor investment efficiency; Corporate employment decisions; Environmental risk; Workforce adjustment (search for similar items in EconPapers)
JEL-codes: G31 G32 J23 Q56 (search for similar items in EconPapers)
Pages: 68 pages
Date: 2026-08
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