Investor Sentiment and Employment

Journal of Financial and Quantitative Analysis, Volume 55, Issue 5, August 2020, pp. 1581-1618.

50 Pages Posted: 14 Jun 2014 Last revised: 20 Feb 2021

See all articles by Maurizio Montone

Maurizio Montone

Utrecht University

Remco C. J. Zwinkels

Vrije Universiteit Amsterdam; Tinbergen Institute

Date Written: February 1, 2019


We develop a multi-country model with moral hazard and noise traders, and show that investor sentiment should affect employment growth both domestically and abroad. Using a large sample of international industry-level data, we find strong support for the model's predictions. We show that US investor sentiment has a positive association with labor market conditions around the world, due to spillover effects as well as foreign direct investments from the US. We also find that US sentiment amplifies the negative effect of local financial crises on job losses, which supports the idea that financial development has a "dark side".

Keywords: Investor sentiment; Labor market; Financial development, Financial crises

JEL Classification: G10, G30, F21, J30

Suggested Citation

Montone, Maurizio and Zwinkels, Remco C.J., Investor Sentiment and Employment (February 1, 2019). Journal of Financial and Quantitative Analysis, Volume 55, Issue 5, August 2020, pp. 1581-1618., Available at SSRN: or

Maurizio Montone

Utrecht University ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, +31 30 253 7373 3584 EC

Remco C.J. Zwinkels (Contact Author)

Vrije Universiteit Amsterdam ( email )

De Boelelaan 1105
Amsterdam, NL-1081HV
+31 20 59 85220 (Phone)


Tinbergen Institute ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS

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