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Nature Dependence and Labor Investment Efficiency

Author

Listed:
  • Jifeng Hong

    (University of Glasgow)

  • Pantelis Kazakis

    (University of Glasgow - Adam Smith Business School)

  • Steven Ongena

    (University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR))

  • Martin Strieborny

    (University of Glasgow)

Abstract

Does dependence on nature distort how firms hire? Using 86,584 firm-year observations from 68 countries over 2010-2024, we show that it does. More naturedependent firms exhibit lower labor-investment efficiency, driven mainly by underhiring. This inefficiency operates through operational and financial frictions: ESG incidents, market undervaluation, and financing constraints. The effect intensifies where social unrest is frequent, populations are aging, production is skill-intensive, and product-market competition is stronger. It weakens under stricter environmental policy, stronger employment protection, and effective government. Nature dependence is therefore not a purely sustainability concern; it is a binding constraint on firms' employment decisions.

Suggested Citation

  • Jifeng Hong & Pantelis Kazakis & Steven Ongena & Martin Strieborny, 2026. "Nature Dependence and Labor Investment Efficiency," Swiss Finance Institute Research Paper Series 26-58, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2658
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    Keywords

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    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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