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When Credit Dries Up: Job Losses in the Great Recession

Author

Listed:
  • Bentolila, Samuel
  • Jansen, Marcel
  • Jiménez, Gabriel
  • Ruano, Sonia

Abstract

We use a unique dataset to estimate the impact of a large credit supply shock on employment in Spain. We exploit marked differences in banks' health at the onset of the Great Recession. Several weak banks were rescued by the State and they reduced credit more than other banks. We compare employment changes from 2006 to 2010 at firms heavily indebted to weak banks before the crisis and the rest. Our estimates imply that these firms suffered an additional employment drop between 3 and 13.5 percentage points due to weak-bank attachment, representing between 8% and 36% of aggregate job losses.

Suggested Citation

  • Bentolila, Samuel & Jansen, Marcel & Jiménez, Gabriel & Ruano, Sonia, 2013. "When Credit Dries Up: Job Losses in the Great Recession," CEPR Discussion Papers 9776, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9776
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    More about this item

    Keywords

    Credit constraints; Great recession; Job losses;
    All these keywords.

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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