Do Financial Factors Affect the Capital-Labour Ratio? Evidence form UK FIrm-Level Data
Marina-Eliza Spaliara ()
Discussion Paper Series from Department of Economics, Loughborough University
This paper investigates the nexus between ﬁnancial factors and the capital-labour ratio using a rich ﬁrm-level data set. It is common in the literature to examine the impact of ﬁnancial constraints on hiring and ﬁring decisions separately from their impact on decisions related to investment in physical capital. We argue that as long as ﬁrms use both inputs in production and there is some substitutability between them, the two decisions need to be jointly analyzed. When we diﬀerentiate across ﬁrms that are more or less ﬁnancially constrained, we ﬁnd that the former group exhibits higher sensitivi¬ties of the capital-labour ratio to ﬁrm-speciﬁc characteristics, compared to the latter.
Keywords: Financial constraints; Firm-speciﬁc characteristics; Capital-Labour ratio. (search for similar items in EconPapers)
JEL-codes: D92 E22 E44 (search for similar items in EconPapers)
Date: 2008-04, Revised 2008-04
New Economics Papers: this item is included in nep-bec and nep-mac
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Journal Article: Do financial factors affect the capital-labour ratio? Evidence from UK firm-level data (2009)
Working Paper: Do Financial Factors Affect The Capital-Labour Ratio: Evidence From UK Firm-Level Data (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:lbo:lbowps:2008-02
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