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, wagepaying 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. ? 2019 by the Board of Regents of the University of Wisconsin System.

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1 October 2019

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The Journal of Human Resources 54(1) , pp.171-199, , Fall, 2019

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DOI: 10.3368/JHR.54.1.0616.8012R1

http://jhr.uwpress.org/content/54/1/171.abstract

This Journal article is published under the centre's Labour programme.