Credit Supply, Firms, and Earnings Inequality

Christian Moser, Farzad Saidi, Benjamin Wirth and Stefanie Wolter

No 12656, CESifo Working Paper Series from CESifo

Abstract: We study the distributional consequences of monetary policy-induced credit supply in the German labor market. Firms in relationships with banks that are more exposed to the introduction of negative interest rates in 2014 experience a relative contraction in credit supply, associated with lower average wages. Within firms, initially lower-paid workers are more likely to leave employment, while initially higher-paid workers see a relative decline in wages. Between firms, wages fall by more at initially higher-paying employers. Our results suggest that credit affects the distribution of wages and employment both within and between firms.

Keywords: wages; employment; distribution; credit supply; monetary policy; downward wage rigidity (search for similar items in EconPapers)
JEL-codes: E24 E51 J23 J31 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-inv and nep-mon
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