Labor and Corporate Finance

Abstract

In this chapter, we review several key topics that lie at the intersection between labor economics and corporate finance. We discuss well-studied questions in this literature as well as new areas of research that are expanding the field of labor and corporate finance. First, we address the relationship between ownership and employees’ labor outcomes. Second, we present an overview of the literature studying the relationship between capital structure and labor markets, including the implications of financial distress. Third, we connect labor with the fast-growing literature on inequality within firms and investments in technology adoption. A common theme across all these topics is the interdependency between firms and labor, where decisions made by firms impact labor and trends in labor markets impact firms.