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The Impact of Bank Credit on Labor Reallocation and Aggregate Industry Productivity
The Impact of Bank Credit on Labor Reallocation and Aggregate Industry Productivity
Working Paper Number CES-16-26
Abstract
Using a difference-in-difference methodology, we find that the state-level deregulation of local U.S. banking markets leads to significant increases in the reallocation of labor within local industries towards small firms with higher marginal products of labor. Using plant-level data, we propose and examine an approach that quantifies the industry productivity gains from labor reallocation and find that these gains are economically important. Our analysis suggests that labor reallocation is a significant channel through which local banking markets affect the aggregate productivity and performance of local industries.
Page Last Revised - October 8, 2021
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