Financing Labor

Benmelech, Efraim; Bergman, Nittai; Seru, Amit

doi:10.3386/w17144

Cited by 148 publications

(135 citation statements)

References 20 publications

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“…The results suggest that labor, similar to capital, requires financing and hence a more efficient credit market increases employment even if investment levels remain constant. This is consistent with the result of Benmelech, Bergman, and Seru (2011), who show that the sensitivity of employment to cash flows remains high even after controlling for concurrent investment. 5 The first implication of this set of results is that credit market imperfections may play an important role in understanding the aggregate dynamics operating through labor as opposed to investment flows.…”

Section: Introductionsupporting

confidence: 81%

Finance and employment: Evidence from U.S. banking reforms

Boustanifar

2014

Journal of Banking & Finance

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Economic theory offers competing hypotheses about how the cost and availability of finance influence labor market outcomes. Making use of the U.S. banking reforms between the 1970s and the 1990s as a quasi-natural experiment, this paper studies the impact of credit market development on employment. This paper documents the significant effects of these reforms on employment growth. Potential channels between finance and employment are also investigated.Changes in the growth of the number of self-employed individuals, the entry and exit of firms, and investment growth do not explain most of the employment growth following the reforms.The reforms had a substantially higher impact in industries with higher labor intensity, which is consistent with the idea that labor has fixed costs that need to be financed.

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Section: Introductionsupporting

confidence: 81%

Finance and employment: Evidence from U.S. banking reforms

Boustanifar

2014

Journal of Banking & Finance

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“…3 In particular, it contains information on employment, measured as a yearly average, as well as on variables like the firm's age, size or indebtedness, which are used as controls in our analysis.…”

Section: Data Set Constructionmentioning

confidence: 99%

When Credit Dries Up: Job Losses in the Great Recession

Bentolila

Jansen

Jiménez

et al. 2017

Journal of the European Economic Association

209

160

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We use a unique dataset to estimate the impact of a large credit supply shock on employment in Spain. We exploit marked differences in banks' health at the onset of the Great Recession. Several weak banks were rescued by the State and they reduced credit more than other banks. We compare employment changes from 2006 to 2010 at firms heavily indebted to weak banks before the crisis and the rest. Our estimates imply that these firms suffered an additional employment drop between 3 and 13.5 percentage points due to weak-bank attachment, representing between 8% and 36% of aggregate job losses. JEL-Code: D920, G330, J230. Terms of use: Documents in EconStor may

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“…Since Duygan-Bump et al (2010) use unemployment rather than firm employment data, they cannot explore the importance of firm entry and exit. Finally, Benmelech, Bergman and Seru (2011) examine the impact of financing constraints on employment using financial and employment measures from Compustat. They limit the analysis to large firms with more than 500 employees.…”

Section: Related Literaturementioning

confidence: 99%

Firm Entry and Employment Dynamics in the Great Recession

Siemer

2012

SSRN Journal

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The recession of [2007][2008][2009] has been characterized by: (1) a large drop in employment concentrated in small firms, (2) an unprecedented decline in the number of firms, and (3) a slow recovery. This paper develops a heterogeneous firm model with labor adjustment cost, endogenous firm entry, and financial constraints that generates these key facts. The model predicts that a large financial shock results in a long-lasting recession due to limited firm entry. Using confidential firm-level employment data from the Bureau of Labor Statistics, I find support for the model mechanism. In the period of 2007-2009, small and young firms in sectors with high external finance dependence exhibited lower employment growth than those in low external finance dependent sectors. The e↵ect of external finance dependence on employment growth in small and young firms is primarily driven by firm entry and exit.

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Financing Labor

Cited by 148 publications

References 20 publications

Finance and employment: Evidence from U.S. banking reforms

Finance and employment: Evidence from U.S. banking reforms

When Credit Dries Up: Job Losses in the Great Recession

Firm Entry and Employment Dynamics in the Great Recession

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