How Employment Responds to Changes in Assets at US Banks and Credit Unions

27 Pages Posted: 17 Apr 2018

See all articles by Derek C. Jones

Derek C. Jones

Hamilton College - Economics Department

Jeffrey L. Pliskin

Hamilton College; The Levy Economics Institute

Matthew Poterba

Richard Bernstein Advisors

Date Written: February 13, 2018

Abstract

While US credit unions have one of the highest market penetration rates in the world (more than 40 per cent), they have been rarely investigated by economists. In this study, we use new panel data to provide the first evidence of how US commercial banks and credit unions adjust their employment levels to output shocks. Monitoring by cooperative members leads us to expect that asset quality and growth will differ between coops and investor owned firms. The role of employee-members leads us to predict variation in employment adjustment when assets rise and fall. We find differing employment adjustment responses in reaction to growing versus shrinking assets and across types of firm. Some of our findings point to greater employment resiliency in credit unions. Our results complement findings from studies of workers cooperatives and firms with employee ownership and thus expand the range of alternative institutional arrangements for which evidence exists for greater employment resiliency compared to investor-owned firms (IOFs). Our findings, as does work by others suggest that credit unions and cooperatives were more resilient during the Great recession than IOFs and also point to the economic potential of credit unions and cooperatives compared to IOFs.

Keywords: CREDIT UNIONS; BANKS; EMPLOYMENT; COOPERATIVES; LABOR DEMAND

JEL Classification: G21; J2; P51

Suggested Citation

Jones, Derek C. and Pliskin, Jeffrey L. and Poterba, Matthew, How Employment Responds to Changes in Assets at US Banks and Credit Unions (February 13, 2018). Journal of Entrepreneurial and Organizational Diversity, Vol. 6, No. 2, 2017, pp.40-66. Available at SSRN: https://ssrn.com/abstract=3145106

Derek C. Jones (Contact Author)

Hamilton College - Economics Department ( email )

198 College Hill Road
Clinton, NY 13323
United States
315-859-4381 (Phone)
315-859-4477 (Fax)

Jeffrey L. Pliskin

Hamilton College ( email )

198 College Hill Road
Clinton, NY 13323
United States
315-859-4143 (Phone)

The Levy Economics Institute

Blithewood
Annandale-on-Hudson, NY 12504
United States

Matthew Poterba

Richard Bernstein Advisors ( email )

120 West 45th Street, Fl 36
New York, NY 10036
United States

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