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Do Financial Market Imperfections Affect the Cyclicality of Employment?

Author

Listed:
  • João Ejarque

    (Institute of Economics, University of Copenhagen)

Abstract

In this paper I show that the idea that firms faced with a liquidity constraint display "excess sensitivity" of employment to shocks is not correct. The employment decision is independent of the financing constraint and artificial data shows that there is no such excess sensitivity.

Suggested Citation

  • João Ejarque, 2002. "Do Financial Market Imperfections Affect the Cyclicality of Employment?," Discussion Papers 02-10, University of Copenhagen. Department of Economics.
    • Handle: RePEc:kud:kuiedp:0210
    as

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    File URL: http://www.econ.ku.dk/english/research/publications/wp/2002/0210.pdf/
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    Cited by:

    1. Ryan Michaels & T Beau Page & Toni M Whited, 2019. "Labor and Capital Dynamics under Financing Frictions," Review of Finance, European Finance Association, vol. 23(2), pages 279-323.
    2. Toni M. Whited & Jake Zhao, 2021. "The Misallocation of Finance," Journal of Finance, American Finance Association, vol. 76(5), pages 2359-2407, October.

    More about this item

    Keywords

    employment volatility; investment; Q theory;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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