Do credit shocks affect labor demand? Evidence for employment and wages during the financial crisis
By Alexander A. Popov, Jörg Rocholl. Journal of Financial Intermediation, 2016
131 citations recorded by the source corpus.
Abstract We study the impact of exogenous funding shocks to German savings banks during the U.S. subprime mortgage crisis on the labor decisions of 30,000 + private and public firms in Germany. We find that firms with credit relationships with affected banks experience a significant decline in labor demand relative to firms with credit relationships with healthy banks, manifested in a simultaneous reduction in firm-level employment and average wages. The employment effect is more pronounced in larger firms, while the wage effect is stronger in smaller firms. Both employment and wages go back to pre-shock levels three years after the shock.
Subfields: Economics and Econometrics, Finance
View Paper: https://www.semanticscholar.org/paper/052e4b1baaeecd1e04e536f2d278552c197d34b7
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Citations in the corpus
- Borrowers under water! Rare disasters, regional banks, and recovery lending (2020, methodology): “We combine the firm information with bank data and define bank-firm relationships from a string-based match of bank names and firm names from observable relationships (Popov and Rocholl, 2018; Huber, 2018; Dwenger et al., 2018).”