CReAM Brown Bag seminar presented by Effrosyni Adamopoulou

Abstract: This paper studies the long term consequences on workers’ earnings of the credit crunch induced by the 2007-2008 financial crisis. We study the evolution of both employment and wages in a large sample of Italian workers followed for nine years after the crisis. We rely on a unique matched bank-employer-employee administrative dataset to identify firms that, because of the collapse of the interbank market during the financial crisis, were unexpectedly affected by credit restrictions. We find that, compared to firms less hit by the credit crunch, workers in more exposed firms experience persistent and sizable earnings losses mainly due to a permanent drop in days worked. These effects are heterogeneous across workers and depend on local labor market conditions. Firms operating in areas with favorable labor market conditions react to the credit shock by hoarding high-type workers and displacing low-type ones. Under unfavorable labor market conditions instead, firms select to displace high-type (and therefore more expensive) workers, even though wages do react to the slack. All in all, our results document persistent effects of the Global financial crisis on the earnings distribution and a positive, yet incomplete, reallocation of workers towards better firms.

Zoom Link: https://zoom.us/j/175757188

Meeting ID: 1 7575 7188
Password: BB260520

If you wish to talk to the speaker, you can sign up on: https://wiki.ucl.ac.uk/pages/viewpage.action?pageId=135758208

Format and Rules: The seminar is held on Zoom and lasts 60 minutes including questions. Seminars will be recorded and available on the CReAM website a few days after. Please note that you may be recorded if you activate your video and speak during the seminar.