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Do Financial Constraints Affect the Composition of Workers in a Firm?

Author

Listed:
  • Breunig, Robert

    (Australian National University)

  • Hourani, Diana

    (Australian National University)

  • Bakhtiari, Sasan

    (Department of Industry, Innovation and Science Australia)

  • Magnani, Elisabetta

    (Macquarie University, Sydney)

Abstract

We study the relationship between financing constraints and the work- force composition of firms that employ both casual and non-casual workers. We use data on Australian firms from 2009-2014 and a more direct measure of firm financial constraint than previous studies. We show that the proportion of casual workers in firms grew over the time period being analysed. This was the case regardless of whether a firm was financially constrained or not. However, the magnitude of this change differed between financially constrained and unconstrained firms. We find that of firms whose workforces were growing, financially constrained firms hired relatively fewer casual workers than financially unconstrained firms did. This is consistent with firms using internal financing to cope with a lack of access to credit and equity.

Suggested Citation

  • Breunig, Robert & Hourani, Diana & Bakhtiari, Sasan & Magnani, Elisabetta, 2020. "Do Financial Constraints Affect the Composition of Workers in a Firm?," IZA Discussion Papers 12970, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12970
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    Cited by:

    1. Robert Breunig & Diana Hourani & Sasan Bakhtiari & Elisabetta Magnani, 2020. "Do financial constraints affect the composition of workers of a firm?," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 23(1), pages 79-97.
    2. Brunello, Giorgio & Gereben, Áron & Weiss, Christoph T. & Wruuck, Patricia, 2020. "Financing Constraints and Employers' Investment in Training," IZA Discussion Papers 13067, Institute of Labor Economics (IZA).
    3. Giorgio Brunello & Áron Gereben & Désirée Rückert & Christoph Weiss & Patricia Wruuck, 2022. "Do investments in human and physical capital respond differently to financing constraints?," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 158(1), pages 1-14, December.
    4. Antonio Andrés Bellofatto & Begoña Domínguez & Elyse C. Dwyer, 2023. "Uncovering Urban Advantages: Evidence from Australian Firm‐Level Data," The Economic Record, The Economic Society of Australia, vol. 99(S1), pages 13-34, December.

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    More about this item

    Keywords

    financial constraints; firm behaviour; employment patterns; casual work; Australia;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • J29 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Other
    • J49 - Labor and Demographic Economics - - Particular Labor Markets - - - Other

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