Financing Labor

Efraim Benmelech, Nittai K. Bergman and Amit Seru

No 17144, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Financial market imperfections can have significant impact on employment decisions of firms. We illustrate the economic importance of this channel by demonstrating that the responsiveness of employment decisions to firms' financial health is quantitatively similar to the much-studied responsiveness of investment decisions to cash-flows. We use a collage of three 'quasi-experiments' used previously in the investment-cash flow and finance-growth literatures to trace the effects of finance on employment. Our results suggest that financial constraints and the availability of credit play an important role in firm-level employment decisions, as well as aggregate unemployment outcomes

JEL-codes: D53 E24 E44 G31 G32 (search for similar items in EconPapers)
Date: 2011-06
Note: CF EFG LS ME
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Citations: View citations in EconPapers (18)

Published as Efraim Benmelech & Nittai Bergman & Amit Seru, 2021. "Financing Labor," Review of Finance, vol 25(5), pages 1365-1393.

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