Economic Shocks and Labour Market Flexibility
This study uses data from 1,140 Philippine municipalities over 26 quarters
Abstract
The researchers 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, they 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. They argue that those results are best explained by implicit contracts where workers and firms share risks. They provide extensive qualitative data suggesting that employment contracts in the Philippines allow for such flexibility.
This paper is a part of a Global Research Program on Spatial Development of Cities, funded by the Multi Donor Trust Fund on Sustainable Urbanization of the World Bank and supported by the UK Department for International Development
Citation
Simon Franklin and Julien Labonne (2017) Economic Shocks and Labour Market Flexibility. World Bank
Links
Economic Shocks and Labour Market Flexibility (PDF, 1.8MB)