BANK MARKET STRUCTURE AND LOCAL EMPLOYMENT GROWTH

Robert Collender and Sherrill Shaffer

No 33566, Technical Bulletins from United States Department of Agriculture, Economic Research Service

Abstract: The relationship between financial structure and job growth is both an unexplored issue and a possible channel through which financial structure impacts income growth. We explore these issues using both longrun and shortrun models. Our shortrun model provides evidence of a robust relationship between local employment growth and geographic deregulation of bank activity in the United States. We also found that U.S. nonmetropolitan employment grew faster in 1973-96 where there were fewer locally owned bank offices and a more concentrated initial banking market structure; these linkages were less stable in metropolitan areas. Overall, however, we found only weak evidence in support of an employment growth channel linking bank structure to subsequent economic growth. Our findings suggest that job creation is not consistently a major channel by which banking structure stimulates income growth. A corollary is that the macroeconomic benefits of banking structure accrue primarily to those already working, rather than new workers.

Keywords: Financial Economics; Labor and Human Capital (search for similar items in EconPapers)
Pages: 27
Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uerstb:33566

DOI: 10.22004/ag.econ.33566

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