Abstract

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.

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Additional Information

ISSN
1548-8004
Print ISSN
0022-166X
Pages
pp. 171-199
Launched on MUSE
2019-01-14
Open Access
No
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