Arbeitspapier

Credit shocks, employment protection, and growth: Firm-level evidence from Spain

We offer new evidence on the real effects of credit shocks in the presence of employment protection regulations by exploiting a unique provision in Spanish labor laws: dismissal rules are less stringent for Spanish firms with fewer than 50 employees, lowering the cost of hiring new workers. Using a new dataset, we find that during the financial crisis, healthy firms with fewer than 50 employees borrowing from troubled banks grew faster in sectors where capital and labor were sufficiently s ubstitutable. This result does not obtain when we use a different cut-off for Spain or the same cut-off for firms in Germany. Our evidence suggests that labor market flexibility can dampen the negative effect of credit shocks by allowing firms to keep growing by substituting labor for capital.

ISBN
978-92-899-3271-4
Sprache
Englisch

Erschienen in
Series: ECB Working Paper ; No. 2166

Klassifikation
Wirtschaft
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Labor Standards: General
Production and Organizations: General
Thema
credit crunch
employment protection
capital-labor substitution
firm growth

Ereignis
Geistige Schöpfung
(wer)
Laeven, Luc
McAdam, Peter
Popov, Alexander
Ereignis
Veröffentlichung
(wer)
European Central Bank (ECB)
(wo)
Frankfurt a. M.
(wann)
2018

DOI
doi:10.2866/23874
Handle
Letzte Aktualisierung
10.03.2025, 11:43 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Laeven, Luc
  • McAdam, Peter
  • Popov, Alexander
  • European Central Bank (ECB)

Entstanden

  • 2018

Ähnliche Objekte (12)