Droughts and Deluges: Non-Linear Effects of Climate Extremes on the Gender Gap in Labour Supply

Abstract

Over the past three decades, extreme climate events have caused losses of worth USD 4.5 trillion. Using collective bargaining model, I find that the gendered labour supply response to adverse shocks is not straightforward since it depends on relative strength of income and substitution effects of men's and women's participation. Using a panel of 151 countries (1995-2019), I examine how extreme climate conditions shape gender gap in labour force participation. This study finds that the gender gap in paid labour exhibits a U-shaped relationship with droughts and an inverted U-shaped relationship with extreme wet conditions. The drought pattern is primarily driven by gender gap in employment while wetness affects gender gap in participation through unemployment. These relationships vary with country characteristics. Countries with high disaster-displacement risk exhibit declining gender gaps in participation during excess wetness while moderate-risk economies experience expanded gaps during droughts. Furthermore, the drought U-shape is most pronounced in countries with low to moderate empowerment while the nonlinear wet responses is concentrated only in moderately empowered countries. Lastly, both droughts and excess wetness expands gender gap in countries with weak net resilience to climate shocks.