The global financial recession of 2008-9 as well as historical precedents with financial crises suggest that financial shocks do translate into the labor markets. In this paper we first document that financial recessions are different from other recessions in terms of their labor market impact, as they involve a larger employment/unemployment response conditioning on output. Second, we survey the various mechanisms linking financial shocks to employment adjustment, developing a new theory of the effects of leverage on job creation and destruction. Third, we present evidence coherent with one of such mechanisms, notably with the prediction that more leveraged firms experience larger job destruction during financial recessions, controlling for the scale of output falls.

Financial Shocks and Labor: Facts and Theories

BOERI, TITO MICHELE;GARIBALDI, PIETRO;
2013

Abstract

The global financial recession of 2008-9 as well as historical precedents with financial crises suggest that financial shocks do translate into the labor markets. In this paper we first document that financial recessions are different from other recessions in terms of their labor market impact, as they involve a larger employment/unemployment response conditioning on output. Second, we survey the various mechanisms linking financial shocks to employment adjustment, developing a new theory of the effects of leverage on job creation and destruction. Third, we present evidence coherent with one of such mechanisms, notably with the prediction that more leveraged firms experience larger job destruction during financial recessions, controlling for the scale of output falls.
2013
Boeri, TITO MICHELE; Garibaldi, Pietro; Moen, E. R.
File in questo prodotto:
Non ci sono file associati a questo prodotto.

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11565/3860904
 Attenzione

Attenzione! I dati visualizzati non sono stati sottoposti a validazione da parte dell'ateneo

Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 28
  • ???jsp.display-item.citation.isi??? 25
social impact