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| LEADER |
01467nam a2200193Ia 4500 |
| 001 |
10.1093-rof-rfy020 |
| 008 |
220511s2019 CNT 000 0 und d |
| 020 |
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|a 15723097 (ISSN)
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| 245 |
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|a Labor and Capital Dynamics under Financing Frictions
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| 260 |
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|b Oxford University Press
|c 2019
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| 856 |
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|z View Fulltext in Publisher
|u https://doi.org/10.1093/rof/rfy020
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| 520 |
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|a We assemble a new, quarterly panel dataset that links firms' investment and financing to their employment and wages. In the data, wages and leverage are negatively related, both cross-sectionally and within firms. This pattern contradicts models in which firms insure workers against unemployment risk. We reconcile this fact with a model that integrates factor adjustment frictions and wage bargaining with costly external financing. In the model, the probability of default rises with debt. Because default incurs deadweight costs, the expected surplus over which firms and workers bargain falls, thus depressing wages. We show that raising financing costs reduces employment and wages, in line with recent reduced-form evidence. © 2017 The Authors. Published by Oxford University Press on behalf of the European Finance Association. All rights reserved.
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|a Financing frictions
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| 650 |
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|a Labor and capital dynamics
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| 650 |
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|a Wage bargaining
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| 700 |
1 |
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|a Beau Page, T.
|e author
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| 700 |
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|a Michaels, R.
|e author
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| 700 |
1 |
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|a Whited, T.M.
|e author
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| 773 |
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|t Review of Finance
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