Firms' Financial Policy and Labour Demand: Theory and Evidence

P. Bergstrom and S. Lindberg

Working Papers from Uppsala - Working Paper Series

Abstract: This paper investigates the influence of financial leverage on firms' intertemporal hiring decisions in the context of the hierarchy of finance approach to coporate finance. We derive the Euler equation of employment in the presence of convex adjustment costs, and show the empirical implications of firms facing a hierarchy of financial costs. A linearised version of the model is estimated on a large panel of Swedish manufacturing firms over the period 1979-88.

Keywords: LABOUR MARKET; BUSINESS FINANCING; BUSINESS CYCLES (search for similar items in EconPapers)
JEL-codes: D92 G32 J23 (search for similar items in EconPapers)
Pages: 30 pages
Date: 1998
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:fth:uppaal:1998:18

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