Advanced Search
MyIDEAS: Login to save this article or follow this journal

Liquidity Constraints Faced by Firms and Employment

Contents:

Author Info

  • Hannu Piekkola
  • Pertti Haaparanta
Registered author(s):

    Abstract

    In this study on labour input and wage formation in Finland the importance of liquidity constraints measured by the ratio of interest payments to cash flow is examined. Financial solvency problems are shown to lead to a reduction in labour input, potentially explaining for the most part the 16% peak rate of unemployment during the deep recession period in the beginning of the 1990s. The link between leverage and “real-side” behaviour of firms is, hence, clear in labour input decisions. The large impact of leverage on employment can be explained by rigid wages and liquidity constraints. Labour hoarding and fixed costs in recruitment increase the long run effects, but also explain the weaker immediate effect as the level of liquidity constraints goes up.

    Download Info

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below under "Related research" whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Bibliographic Info

    Article provided by Duncker & Humblot, Berlin in its journal Applied Economics Quarterly.

    Volume (Year): 52 (2006)
    Issue (Month): 1 ()
    Pages: 55-73

    as in new window
    Handle: RePEc:aeq:aeqaeq:v52_y2006_i1_q1_p55-73

    Contact details of provider:
    Web page: http://www.duncker-humblot.de

    Order Information:
    Email:
    Web: http://www.duncker-humblot.de/index.php/zeitschriften/wirtschafts-undsozialwissenschaften/appliedeconomicsquarterly.html

    Related research

    Keywords: Labour Demand; Labour Union; Financial Constraints; Firm Indebtedness;

    Find related papers by JEL classification:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Piekkola, Hannu, 2006. "Tax cuts and employment: Evidence from Finnish linked employer-employee data," Discussion Papers 1041, The Research Institute of the Finnish Economy.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:aeq:aeqaeq:v52_y2006_i1_q1_p55-73. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Deborah Anne Bowen).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.