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Monetary Policy, Labor Income Redistribution and the Credit Channel: Evidence from Matched Employer-Employee and Credit Registers

Martina Jašová, Caterina Mendicino, Ettore Panetti, Jose-Luis Peydro and Dominik Supera

No 1338, Working Papers from Barcelona School of Economics

Abstract: We document the heterogeneous effects of monetary policy on labor market outcomes via credit channel. Using employee-employer and credit registers in Portugal, we show that falling rates increase wages, hours worked and employment more in financially constrained small and young firms. Consistent with the capital-skill complementarity mechanism, we document an increase in the skill premium and show that financially constrained firms increase both physical and human capital investment the most. We uncover a central role of the credit channel with stronger state-dependent effects during crises. The effects are fully driven by firms with bank credit.

Keywords: monetary policy; labor income inequality; firm balance sheet channel; bank lending channel; capital-skill complementarity (search for similar items in EconPapers)
JEL-codes: D22 D31 E52 G01 G21 (search for similar items in EconPapers)
Date: 2022-04
New Economics Papers: this item is included in nep-cba, nep-fdg and nep-mon
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Related works:
Working Paper: Monetary policy, labor income redistribution and the credit channel: Evidence from matched employer-employee and credit registers (2023) Downloads
Working Paper: Monetary Policy, Labor Income Redistribution and the Credit Channel: Evidence from Matched Employer-Employee and Credit Registe (2021) Downloads
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