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When Credit Dries Up: Job Losses in the Great Recession

Author

Listed:
  • Bentolila, Samuel

    () (CEMFI, Madrid)

  • Jansen, Marcel

    () (Universidad Autónoma de Madrid)

  • Jiménez, Gabriel

    () (Bank of Spain)

  • Ruano, Sonia

    () (Bank of Spain)

Abstract

We use a unique dataset to estimate the impact of a large credit supply shock on employment in Spain. We exploit marked differences in banks' health at the onset of the Great Recession. Several weak banks were rescued by the State and they reduced credit more than other banks. We compare employment changes from 2006 to 2010 at firms heavily indebted to weak banks before the crisis and the rest. Our estimates imply that these firms suffered an additional employment drop between 3 and 13.5 percentage points due to weak-bank attachment, representing between 8% and 36% of aggregate job losses.

Suggested Citation

  • Bentolila, Samuel & Jansen, Marcel & Jiménez, Gabriel & Ruano, Sonia, 2013. "When Credit Dries Up: Job Losses in the Great Recession," IZA Discussion Papers 7807, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp7807
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    More about this item

    Keywords

    job losses; Great Recession; credit constraints;
    All these keywords.

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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