The long-term earnings' effects of a credit market disruption

Effrosyni Adamopoulou, Marta De Philippis, Enrico Sette and Eliana Viviano

No 23-048, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: This paper studies the long-term consequences on firms and workers of the credit crunch triggered by the 2007-2008 global financial crisis. Relying on a unique matched bank-employer-employee administrative dataset, we construct a firm-specific credit supply shock and examine firms' and workers' outcomes for 11 years after the crisis. We find that highly-exposed firms shrink permanently and invest less; these effects are larger for high capital-intensive firms. The impact on workers' earnings is also long-lasting, especially for high skilled workers, who are more complementary to capital. Displaced workers reallocate mostly to low capital-intensive firms, experiencing persistent wage losses.

Keywords: credit crunch; employment; wages; long term effects; linked bank-employer-employee panel data; capital-skill complementarity (search for similar items in EconPapers)
JEL-codes: E24 E44 G21 J21 J31 J63 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-bec, nep-fdg, nep-ifn and nep-mac
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https://www.econstor.eu/bitstream/10419/280988/1/1876208112.pdf (application/pdf)

Related works:
Working Paper: The Long-Term Earnings’ Effects of a Credit Market Disruption (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:280988

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