Finance in the New U.S. Economy: Local Finance and Service Job Growth in the Post-Industrial Economy
69 Pages Posted: 11 Dec 2020
Date Written: September 9, 2020
I examine whether local bank finance facilitated the transition to a service-based economy in the U.S. I identify a causal role for local finance in service job creation. I use county-level changes to alcohol laws as demand shocks to service employers across a subsample of U.S. counties. Counties with more local finance experience more service job creation. This leads to labor market transitions that reflect shifts in the broader U.S. economy. Information asymmetry and collateral constraints connect local finance to the service sector. The findings identify a unique role for local finance in the evolution to a post-industrial service-based economy.
Keywords: Local Finance; Employment Growth; Banking; Service Economy
JEL Classification: G21, J24, L83, O14, O43
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