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TOPIC:
Credit and firms' organisation;
ABSTRACT
We study the nexus between the organization of firm's labor and firm credit. We use employer-employee data, firm loans and bank balance sheets to construct an instrument for firm's credit supply based on firm-bank credit linkages. We conduct an event study and evaluate the importance of credit for the organization of firm's labor in the aftermath of an exogenous shock: the global financial crisis. We show that firms reduce employment of team leaders and production workers. We investigate the channel and provide evidence that the re-organization of the firms' labor structure happens via the financing of machines: firms that invested in machines before the financial crisis are more exposed to the credit shock and re-organize by reducing employment of workers that are complementary with machines.
