Year: 2024
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.
Authors: Dongmin Kong, Zihan Xiong, Ni Qin
Institution: Huazhong University of Science and Technology
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: diamond
Funders: National Natural Science Foundation of China, Ministry of Education of the People's Republic of China, Huazhong University of Science and Technology, Fundamental Research Funds for the Central Universities, National Social Science Fund of China, Humanities and Social Science Fund of Ministry of Education of China
OpenAlex ID: W4405210950