Firm-level employment, labour market reforms, and bank distress

Ralph Setzer and Moritz Stieglitz

No 2334, Working Paper Series from European Central Bank

Abstract: We explore the interaction between labour market reforms and financial frictions. Our study combines a new cross-country reform database on labour market reforms with matched firm-bank data for nine euro area countries over the period 1999 to 2013. While we find that labour market reforms are overall effective in increasing employment, restricted access to bank credit can undo up to half of long-term employment gains at the firm-level. Entrepreneurs without sufficient access to credit cannot reap the full benefits of more flexible employment regulation. JEL Classification: G21, J21, J60, K31

Keywords: bank stress; employment protection; structural reforms; unemployment insurance (search for similar items in EconPapers)
Date: 2019-12
New Economics Papers: this item is included in nep-ban, nep-eec, nep-fdg and nep-lma
Note: 1128184
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Related works:
Journal Article: Firm-level employment, labour market reforms, and bank distress (2022)
Working Paper: Firm-level employment, labour market reforms, and bank distress (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20192334

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