PT  - JOURNAL ARTICLE
AU  - Franklin, Simon
AU  - Labonne, Julien
TI  - Economic Shocks and Labour Market Flexibility
AID  - 10.3368/jhr.54.1.0616.8012R1
DP  - 2017 Oct 03
TA  - Journal of Human Resources
PG  - 0616-8012r1
4099  - http://jhr.uwpress.org/content/early/2017/10/02/jhr.54.1.0616.8012R1.short
4100  - http://jhr.uwpress.org/content/early/2017/10/02/jhr.54.1.0616.8012R1.full
AB  - We test how labour 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.