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Financing Labor

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  • Efraim Benmelech
  • Nittai K. Bergman
  • Amit Seru

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

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17144.

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Date of creation: Jun 2011
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Handle: RePEc:nbr:nberwo:17144

Note: CF EFG LS ME
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  14. Ramirez, Carlos D, 1995. " Did J. P. Morgan's Men Add Liquidity? Corporate Investment, Cash Flow, and Financial Structure at the Turn of the Twentieth Century," Journal of Finance, American Finance Association, American Finance Association, vol. 50(2), pages 661-78, June.
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Cited by:
  1. Olsson, Martin & Tåg, Joacim, 2012. "Private Equity and Employees," Working Paper Series, Research Institute of Industrial Economics 906, Research Institute of Industrial Economics.
  2. Burcu Duygan-Bump & Alexey Levkov & Judit Montoriol-Garriga, 2010. "Financing constraints and unemployment: evidence from the Great Recession," Risk and Policy Analysis Unit Working Paper, Federal Reserve Bank of Boston QAU10-6, Federal Reserve Bank of Boston.
  3. Marco Pagano & Giovanni Pica, 2011. "Finance and Employment," CSEF Working Papers, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy 283, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.

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