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

<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.