The Long Run Earnings Effects of a Credit Market Disruption

Effrosyni Adamopoulou, Marta De Philippis, Enrico Sette and Eliana Viviano

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: This paper studies the long-term consequences on firms and workers of the credit crunch triggered by the 2007-2008 global financial crisis. Relying on a unique matched bank-employer-employee administrative dataset, we construct a firm-specific credit supply shock and examine firms’ and workers’ outcomes for 11 years after the crisis. We find that highly-exposed firms shrink permanently and invest less; these effects are larger for high capital-intensive firms. The impact on workers’ earnings is also long-lasting, especially for high skilled workers, who are more complementary to capital. Displaced workers reallocate mostly to low capital-intensive firms, experiencing persistent wage losses.

Keywords: credit crunch; employment; wages; long run effects; administrative data; linked bank-employer-employee panel data (search for similar items in EconPapers)
JEL-codes: E24 E44 G21 J21 J31 J63 (search for similar items in EconPapers)
Pages: 47
Date: 2020-04
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Working Paper: The Long Run Earnings Effects of a Credit Market Disruption (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2020_169v3

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