The Effect of Extreme Temperature Shocks on the Type of Firm Labor Hired

2026/07/26 by Kairon Shayne D. Garcia, Gregmar I. Galinato, Asif M. Islam
Business, Management and Accounting · Economics, Econometrics and Finance · #Corporate Finance and Governance #Firm Innovation and Growth #Labor market dynamics and wage inequality

paper · doi:10.3368/le.103.1.060225-0043r

crossref issued 2026/07/26 · crossref published 2026/07/26 · crossref published-online 2026/07/26 · openalex publication_date 2026/07/26 · crossref created 2026/07/26 · crossref deposited 2026/07/26 · crossref indexed 2026/07/26 · openalex created_date 2026/07/27 · openalex updated_date 2026/07/28

Abstract

<h3>Abstract</h3> The article estimates the effect of extreme temperature on labor in the manufacturing and services sectors in the Philippines. We use firm-level survey and temperature data and exploit the exogenous annual variation of maximum temperature. We find a rise in the projected annual increase of extreme temperature from climate change by 0.08℃, reduces employment by 14 workers for a firm with 136 employees in export-focused industries in dry regions. Male, temporary, skilled workers in large, technology-dependent, non-food firms, are most affected by extreme temperature. The mechanism is the reduction in capital investment leading to a complementary reduction in labor hired.

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