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Can Paying Firms Quicker Affect Aggregate Employment?

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  • Jean Barrot
  • Ramana Nanda

Abstract

This paper studies the impact of reform on county-sector employment growth over three years. Despite firms being paid just 15 days sooner, we find payroll increased 10 cents for each accelerated dollar, with two-thirds of the effect coming from an increase in new hires and the balance from an increase in earnings. The result of this study highlights an important channel through which financing constraints can be alleviated for small firms, and emphasizes the general-equilibrium effects of large-scale interventions, which can lead to a substantially lower net impact on aggregate outcomes. [Working Paper 22420]

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  • Jean Barrot & Ramana Nanda, 2016. "Can Paying Firms Quicker Affect Aggregate Employment?," Working Papers id:11119, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:11119
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    Cited by:

    1. María Angélica Arbeláez & Alejandro Becerra & Francisco Fernández & David Forero, 2019. "El sector comercio en Colombia y el crédito de proveedores," Informes de Investigación 17610, Fedesarrollo.
    2. Pomeranz, Dina & Gerardino, Maria Paula & Litschig, Stephan, 2017. "Distortion by Audit: Evidence from Public Procurement," CEPR Discussion Papers 12529, C.E.P.R. Discussion Papers.
    3. Jean‐Noël Barrot & Erik Loualiche & Matthew Plosser & Julien Sauvagnat, 2022. "Import Competition and Household Debt," Journal of Finance, American Finance Association, vol. 77(6), pages 3037-3091, December.
    4. Lawrence, Craig & Tunny, Gene, 2018. "Economic Analysis of Extended Payment Terms," MPRA Paper 107124, University Library of Munich, Germany.
    5. Bottero, Margherita & Lenzu, Simone & Mezzanotti, Filippo, 2020. "Sovereign debt exposure and the bank lending channel: Impact on credit supply and the real economy," Journal of International Economics, Elsevier, vol. 126(C).
    6. Maurizio Conti & Leandro Elia & Antonella Rita Ferrara & Massimiliano Ferraresi, 2020. "Government late payments and firms survival. Evidence from the EU," Working papers 87, Società Italiana di Economia Pubblica.
    7. P. Beaumont, 2017. "Time is Money: Cash-Flow Risk and Export Market Behavior," Documents de Travail de l'Insee - INSEE Working Papers g2017-10, Institut National de la Statistique et des Etudes Economiques.

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    More about this item

    Keywords

    Employment; payroll; large-scale interventions;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • G2 - Financial Economics - - Financial Institutions and Services
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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