How does climate risks asymmetrically affect labor market? A moments quantile methods analysis for the GCC countries

This study examines the asymmetric impacts of these climate shocks—specifically temperature, precipitation, and drought—on employment levels in the GCC region. By analyzing monthly data from 1991 to 2024, we apply asymmetric MM-QR and IV-QR methodologies, alongside with bootstrap causality test, to unravel the complex interconnections between climate variables and employment. Our empirical analysis reveals heterogeneous impacts of climate shocks across employment distribution quantiles. Temperature shocks demonstrate asymmetric effects, with extreme heat reducing employment particularly at moderate to high employment levels, while cooler conditions correlate positively with employment. Precipitation shocks show clear asymmetric patterns: positive shocks enhance employment across all quantiles, with stronger effects in lower quantiles, while negative shocks uniformly decrease employment, especially in higher quantiles. Unexpectedly, positive drought shocks correlate with increased employment in lower quantiles, possibly reflecting adaptation-related labor demand, while negative drought shocks show declining employment effects, particularly in higher quantiles. Causality analysis confirms that climate indicators significantly influence employment patterns, highlighting the vulnerability of GCC labor markets to climate variations. These findings suggest the need for comprehensive policy responses, including enhanced workplace climate protection measures, water resource management strategies, and drought resilience programs to safeguard employment stability in the face of increasing climate variability.