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Capital and Labor Reallocation within Firms

Author

Listed:
  • XAVIER GIROUD
  • HOLGER M. MUELLER

Abstract

type="main"> We document how a positive shock to investment opportunities at one plant (“treated plant”) spills over to other plants within the same firm, but only if the firm is financially constrained. To provide the treated plant with resources, the firm's headquarters withdraws capital and labor from other plants, especially plants that are relatively less productive, not part of the firm's core industries, and located far away from headquarters. As a result of the resource reallocation, aggregate firm-wide productivity increases. We do not find evidence of capital or labor spillovers among plants of financially unconstrained firms.

Suggested Citation

  • Xavier Giroud & Holger M. Mueller, 2015. "Capital and Labor Reallocation within Firms," Journal of Finance, American Finance Association, vol. 70(4), pages 1767-1804, August.
  • Handle: RePEc:bla:jfinan:v:70:y:2015:i:4:p:1767-1804
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    File URL: http://hdl.handle.net/10.1111/jofi.12254
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    Citations

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    Cited by:

    1. Michael Koch, 2016. "Skills, Tasks and the Scarcity of Talent in a Global Economy," Review of International Economics, Wiley Blackwell, vol. 24(3), pages 536-563, August.
    2. Giacinta Cestone & Chiara Fumagalli & Francis Kramaz & Giovanni Pica, 2015. "Insurance Between Firms: The Role of Internal Labor Markets," CSEF Working Papers 386, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 15 Feb 2017.
    3. Xavier Giroud & Holger M. Mueller, 2017. "Firms' Internal Networks and Local Economic Shocks," NBER Working Papers 23176, National Bureau of Economic Research, Inc.
    4. Keuschnigg, Christian & Kogler, Michael, 2017. "Schumpeterian Banks: Credit Reallocation and Capital Requirements," Economics Working Paper Series 1704, University of St. Gallen, School of Economics and Political Science.
    5. Nuri Ersahin, 2018. "Creditor Rights, Technology Adoption, and Productivity: Plant-Level Evidence," Working Papers 18-20, Center for Economic Studies, U.S. Census Bureau.
    6. Andrea Bassanini & Giorgio Brunello & Eve Caroli, 2017. "Not in My Community: Social Pressure and the Geography of Dismissals," Journal of Labor Economics, University of Chicago Press, vol. 35(2), pages 429-483.
    7. John (Jianqiu) Bai & Daniel Carvalho & Gordon Phillips*, 2016. "The Impact of Bank Credit on Labor Reallocation and Aggregate Industry Productivity," Working Papers 16-26, Center for Economic Studies, U.S. Census Bureau.
    8. Giroud, Xavier & Mueller, Holger M, 2016. "Redistribution of Local Demand Shocks through Firms' Internal Networks," CEPR Discussion Papers 11384, C.E.P.R. Discussion Papers.
    9. Matthias Kehrig & Nicolas Vincent, 2017. "Do Firms Mitigate or Magnify Capital Misallocation? Evidence from Planet-Level Data," CESifo Working Paper Series 6401, CESifo Group Munich.
    10. repec:eee:dyncon:v:89:y:2018:i:c:p:100-116 is not listed on IDEAS
    11. Nuri Ersahin, 2017. "Creditor Rights, Technology Adoption, and Productivity: Plant-Level Evidence," Working Papers 17-36, Center for Economic Studies, U.S. Census Bureau.
    12. repec:eee:corfin:v:50:y:2018:i:c:p:402-423 is not listed on IDEAS
    13. Smolyansky, Michael, 2016. "Policy Externalities and Banking Integration," Finance and Economics Discussion Series 2016-8, Board of Governors of the Federal Reserve System (U.S.), revised 15 Feb 2018.
    14. repec:spr:reaccs:v:23:y:2018:i:1:d:10.1007_s11142-017-9421-3 is not listed on IDEAS
    15. Matthias Kehrig & Nicolas Vincent, 2018. "Do Firms Mitigate or Magnify Capital Misallocation? Evidence from Plant-Level Data," 2018 Meeting Papers 233, Society for Economic Dynamics.
    16. Bakke, Tor-Erik & Gu, Tiantian, 2017. "Diversification and cash dynamics," Journal of Financial Economics, Elsevier, vol. 123(3), pages 580-601.
    17. repec:eee:ecmode:v:70:y:2018:i:c:p:245-258 is not listed on IDEAS
    18. repec:bla:deveco:v:55:y:2017:i:2:p:75-104 is not listed on IDEAS
    19. repec:eee:jfinin:v:30:y:2017:i:c:p:86-106 is not listed on IDEAS

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