Climate Shocks and Unemployment Claims

ABSTRACT Using a US state–level climate risk measure and the panel local projections framework, this study analyzes both linear and asymmetric effects of climate shocks on unemployment claims. The results provide strong evidence that climate shocks significantly increase both initial and continuing claims, with the linear estimates showing a stronger impact on initial claims. In the nonlinear framework, where climate risk and economic condition indices are used as regime‐switching variables, we also find asymmetric effects of climate shocks across both types of claims. The findings offer valuable insights for policymakers aiming to design effective mitigation strategies and enhance labor market resilience.