Work

Credit and firms’ organization

Year: 2025

Type: article

Abstract: We investigate how credit availability affects the organization of firms’ labor. We construct an in- strument for firm’s credit supply based on firm-bank credit linkages and conduct an event study on the decision to reorganize the labor force using data on Portuguese firms, workers and banks. We show that the reorganization of the firms’ labor structure is connected to the financing of machines and equipment: firms that invested in machines and equipment are more exposed to credit shortages and reorganize by reducing employment of production workers and specialized workers that are complementary with ma- chines. These findings shed light on how credit dynamics shape labor decisions within firms, providing valuable insights into their behavior in response to financial limitations.

Source: Journal of International Economics

DOI: 10.1016/j.jinteco.2025.104172

Authors: Alessandro Sforza, Edoardo Maria Acabbi

Institutions: Centre for Economic Policy Research, University of Bologna, Universidad Carlos III de Madrid

Language: English

Topic: Banking stability, regulation, efficiency

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $4,300