cover_journal-of-international-money-and-finance.png

Firm-level Employment, Labour Market Reforms, and Bank Distress

We explore the impact of financial frictions on the employment effect of labour market reforms. Our study combines a new cross-country reform database on labour market reforms with matched firm-bank data for nine euro area countries over the period 1999 to 2013. While we find that labour market reforms are overall effective in increasing employment, restricted access to bank credit can undo up to half of medium to long-term employment gains at the firm-level. Entrepreneurs without sufficient access to credit cannot reap the full benefits of more flexible employment regulation.

15. February 2022

Authors Ralph Setzer Moritz Stieglitz

Whom to contact

For Researchers

Moritz Stieglitz
Moritz Stieglitz
Economist

If you have any further questions please contact me.

+49 345 7753-840 Request per E-Mail

For Journalists

Mitglied der Leibniz-Gemeinschaft LogoTotal-Equality-LogoWeltoffen Logo