Can Paying Firms Quicker Affect Aggregate Employment?

Published By: NATIONAL BUREAU OF ECONOMIC RESEARCH on eSS | Published Date: July , 2016

This paper studies the impact of reform on county-sector employment growth over three years. Despite firms being paid just 15 days sooner, we find payroll increased 10 cents for each accelerated dollar, with two-thirds of the effect coming from an increase in new hires and the balance from an increase in earnings. The result of this study highlights an important channel through which financing constraints can be alleviated for small firms, and emphasizes the general-equilibrium effects of large-scale interventions, which can lead to a substantially lower net impact on aggregate outcomes. [Working Paper 22420]

Author(s): Jean Barrot, Ramana Nanda | Posted on: Jul 22, 2016 | Views()


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