Location of Repository

Financial Liberalization, Firm Organization and the Labor Market VERY PRELIMINARY

By David Thesmar and Mathias Thoenig

Abstract

This paper provides an analysis of the impact of financial liberalisation on firms ’ organisations and labor demand. We argue that financial liberalisation tend to foster the adoption by firms of more profitable, yet more risky strategies. Because of product market competition, however, markups do not improve following firm liberalisation. As a result of firms being more flexible, labor market reallocations increase, firm level uncertainty rises, and consumers are better-off. Hence, this paper provides a financial rationale for the increase of firm level uncertainty that has recently been documented in France and the US, without introducing any improvement or worsening in firm governance. We then use French firm level data and the French financial reforms of the 1990s to provide empirical evidence in line with our theoretical prediction.

Year: 2011
OAI identifier: oai:CiteSeerX.psu:10.1.1.198.7604
Provided by: CiteSeerX
Download PDF:
Sorry, we are unable to provide the full text but you may find it at the following location(s):
  • http://citeseerx.ist.psu.edu/v... (external link)
  • http://www.dise.unisa.it/pdf/t... (external link)
  • Suggested articles


    To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.