Credit and Firm-Level Volatility of Employment

Vincenzo Quadrini

No 1254, 2016 Meeting Papers from Society for Economic Dynamics

Abstract: We study a firm dynamics model where access to credit improves the bargaining position of firms with workers and increases the incentive to hire. To evaluate the importance of the bargaining channel for the hiring decisions of firms, we estimate the model structurally using data from Compustat and Capital IQ. We find that the bargaining channel contributes to about 5.7% of variation in firm-level employment. We also evaluate the contribution of different types of firm-level shocks to employment volatility and find that credit shocks contribute to about 8%, revenue shocks to 48% and job separation shocks to 44%.

Date: 2016
New Economics Papers: this item is included in nep-dge
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Journal Article: Credit and Firm-Level Volatility of Employment (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed016:1254

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