Credit Supply, Firms, and Earnings Inequality

Christian Moser, Farzad Saidi, Benjamin Wirth and Stefanie Wolter

No 16123, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 and employment. 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. Therefore, credit affects the distribution of pay and employment in line with predictions of an equilibrium model with credit and search frictions.

Keywords: Wages; Employment; Worker and firm heterogeneity; Credit supply and demand (search for similar items in EconPapers)
JEL-codes: E24 E51 J23 J31 (search for similar items in EconPapers)
Date: 2022-01
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Related works:
Working Paper: Credit Supply, Firms, and Earnings Inequality (2024)
Working Paper: Credit Supply, Firms, and Earnings Inequality (2021)
Working Paper: Credit Supply, Firms, and Earnings Inequality (2020)
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