When Credit Dries Up: Job Losses in the Great Recession

47 Pages Posted: 10 Dec 2013

See all articles by Samuel Bentolila

Samuel Bentolila

Centro de Estudios Monetarios y Financieros (CEMFI); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

Marcel Jansen

Universidad Carlos III de Madrid - Department of Economics; IZA Institute of Labor Economics

Gabriel Jiménez

Banco de España

Sonia Ruano

Banco de España

Multiple version iconThere are 3 versions of this paper

Date Written: December 2013

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.

Keywords: credit constraints, Great Recession, Job losses

JEL Classification: D92, G33, J23

Suggested Citation

Bentolila, Samuel and Jansen, Marcel and Jimenez, Gabriel and Ruano, Sonia, When Credit Dries Up: Job Losses in the Great Recession (December 2013). CEPR Discussion Paper No. DP9776. Available at SSRN: https://ssrn.com/abstract=2365831

Samuel Bentolila (Contact Author)

Centro de Estudios Monetarios y Financieros (CEMFI) ( email )

Casado del Alisal 5
28014 Madrid
Spain
+34 91 429 0551 (Phone)
+34 91 429 1056 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Marcel Jansen

Universidad Carlos III de Madrid - Department of Economics ( email )

Calle Madrid 126
Getafe, 28903
Spain
+34 91 624 5740 (Phone)
+34 91 624 9875 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Gabriel Jimenez

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Sonia Ruano

Banco de España ( email )

Madrid 28014
Spain

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