PT - JOURNAL ARTICLE AU - Simon Franklin AU - Julien Labonne TI - Economic Shocks and Labor Market Flexibility AID - 10.3368/jhr.54.1.0616.8012R1 DP - 2019 Jan 01 TA - Journal of Human Resources PG - 171--199 VI - 54 IP - 1 4099 - http://jhr.uwpress.org/content/54/1/171.short 4100 - http://jhr.uwpress.org/content/54/1/171.full SO - J Hum Resour2019 Jan 01; 54 AB - 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.