RT Journal Article
SR Electronic
T1 Economic Shocks and Labour Market Flexibility
JF Journal of Human Resources
JO J Hum Resour
FD University of Wisconsin Press
SP 0616-8012r1
DO 10.3368/jhr.54.1.0616.8012R1
A1 Franklin, Simon
A1 Labonne, Julien
YR 2017
UL http://jhr.uwpress.org/content/early/2017/10/02/jhr.54.1.0616.8012R1.abstract
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.