Corporate Reorganization as Labor Insurance in Bankruptcy

Digitalisation and Productivity: Gamechanger or Sideshow?

“…The GNR methodology is being increasingly used in the empirical literature. See, for example: (1) Chan et al (2019) use Danish data to assess the impact of firms' productivity shocks on workers' labour earnings; (2) Bonfim and Nogueira (2021) use Portuguese data to examine the role of corporate reorganization as a source of labour insurance in bankruptcies; or (3) Liu (2019) use both Chinese and Korean data to assess the extent to which industrial policies aimed at reducing distortions should be targeted to upstream sectors.…”

Executive Labor Market Frictions, Corporate Bankruptcy and CEO Careers

“…In a recent paper, Graham et al (2019) establish that employees' annual earnings fall by 67 percent over seven years after their employer files for bankruptcy. Araujo et al (2021) document large earnings losses among employees following bankruptcy using randomly assigned judges in the formal Brazilian reorganization system, while Bonfim and Nogueira (2021) provide evidence that corporate reorganization partially insures workers, even those who move to other firms, against bankruptcy shocks. Our evidence does not support the notion that CEOs have industry-specific skills and shows that CEOs are more likely to continue being CEO when industry demand is low.…”