Business Groups and Employment
52 Pages Posted: 5 Jun 2015 Last revised: 16 Apr 2018
Date Written: April 5, 2018
Using a newly assembled 50 country firm-level database spanning 19 years, we document that business group affiliated firms display substantially less pronounced fluctuations in employment than unaffiliated firms in response to macroeconomic shocks. The alleviation of financial constraints by internal capital markets does not appear to be a sufficient explanation for these results. The less pronounced fluctuations in employment in group affiliated firms following systematic shocks points to a salient set of stakeholders, the employees, who appear to enjoy a bright side of group affiliation. The results are robust to a variety of tests designed to mitigate endogeneity concerns.
Keywords: Business Groups, Employment, Business Cycles
JEL Classification: G3, J6, K31, E32
Suggested Citation: Suggested Citation