Document Type
Article
Abstract
In recent years, global climate risk has been on the rise, with extreme weather and climate-related events becoming more frequent and severe, garnering increased attention. We explore the impact of climate risk on employment adjustments using a dataset of small, medium and micro enterprises in China. Our findings indicate that as climate risk increases, employment adjustment rates increase, net employment growth rates decrease, and job destruction intensifies. These results remain robust in tests for endogeneity and robustness tests. Specifically, extreme weather events impact companies’ factories and production facilities, increasing operating costs and affecting overall production and sales. As a result, labor is underutilized, and companies have to adjust production. Under these conditions, companies face financing constraints and tend to hold cash to mitigate risk, leading them to reduce labor costs and cut employment. Our findings are particularly significant for private enterprises, firms located in the eastern and central regions, and manufacturing companies.
Recommended Citation
Kong, Dongmin; Xiong, Zihan; and Qin, Ni
(2024)
"How Does Climate Risk Affect Employment Adjustment? Firm-Level Evidence from China,"
Bulletin of Monetary Economics and Banking: Vol. 27:
No.
4, Article 4.
DOI: https://doi.org/10.59091/2460-9196.2416
Available at:
https://bulletin.bmeb-bi.org/bmeb/vol27/iss4/4
First Page
655
Last Page
680
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Country
China
Affiliation
Huazhong University of Science and Technology
