Credit and Firm-Level Volatility of Employment

59 Pages Posted: 18 Aug 2015 Last revised: 13 Jul 2017

See all articles by Vincenzo Quadrini

Vincenzo Quadrini

University of Southern California - Marshall School of Business - Finance and Business Economics Department; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Qi Sun

Luohan Academy

Date Written: June 27, 2017

Abstract

We study a firm dynamics model where access to credit improves the bargaining position of firms with workers and increases the incentive to hire. To evaluate the importance of the bargaining channel for the hiring decisions of firms, we estimate the model structurally using data from Compustat and Capital IQ. We find that the contribution of the bargaining channel to the volatility of firm-level employment is about 13% . We also evaluate the relative contribution of credit and revenue shocks and find that credit shocks contribute to about 22%.

Suggested Citation

Quadrini, Vincenzo and Sun, Qi, Credit and Firm-Level Volatility of Employment (June 27, 2017). Available at SSRN: https://ssrn.com/abstract=2646370 or http://dx.doi.org/10.2139/ssrn.2646370

Vincenzo Quadrini (Contact Author)

University of Southern California - Marshall School of Business - Finance and Business Economics Department ( email )

Marshall School of Business
Los Angeles, CA 90089
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Qi Sun

Luohan Academy ( email )

No. 556, Xixi Road, Z Space
Xihu District
Hangzhou, Zhejiang 310013
China

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