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Credit shocks and the European labour market

Katalin Bodnár (), Ludmila Fadejeva, Marco Hoeberichts (), Mario Izquierdo (), Christophe Jadeau () and Eliana Viviano
Additional contact information
Katalin Bodnár: Central Bank of Hungary and European Central
Christophe Jadeau: Banque de France

No 1747, Working Papers from Banco de España, Working Papers Homepage

Abstract: More than five years after the start of the Sovereign debt crisis in Europe, its impact on labour market outcomes is not clear. This paper aims to fill this gap. We use qualitative firm-level data for 24 European countries, collected within the Wage Dynamics Network (WDN) of the ESCB. We first derive a set of indices measuring difficulties in accessing the credit market for the period 2010-13. Second, we provide a description of the relationship between credit difficulties and changes in labour input both along the extensive and the intensive margins as well as on wages. We find strong and significant correlation between credit difficulties and adjustments along both the extensive and the intensive margin. In the presence of credit market difficulties, firms cut wages by reducing the variable part of wages. This evidence suggests that credit shocks can affect not only the real economy, but also nominal variables.

Keywords: credit difficulties; labour input adjustment; intensive margin (search for similar items in EconPapers)
JEL-codes: D53 E24 E44 G31 G32 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2017-12
New Economics Papers: this item is included in nep-eec and nep-mac
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https://www.bde.es/f/webbde/SES/Secciones/Publicac ... /17/Fich/dt1747e.pdf First version, December 2017 (application/pdf)

Related works:
Working Paper: Credit shocks and the European labour market (2018) Downloads
Working Paper: Credit shocks and the European labour market (2018) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:1747

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