Working Paper: CEPR ID: DP16123
Authors: Christian Moser; Farzad Saidi; Benjamin Wirth; Stefanie Wolter
Abstract: We study the distributional consequences of monetary policy-induced credit supply in the German labor market. Firms in relationships with banks that are more exposed to the introduction of negative interest rates in 2014 experience a relative contraction in credit supply, associated with lower average wages and employment. Within firms, initially lower-paid workers are more likely to leave employment, while initially higher-paid workers see a relative decline in wages. Between firms, wages fall by more at initially higher-paying employers. Therefore, credit affects the distribution of pay and employment in line with predictions of an equilibrium model with credit and search frictions.
Keywords: wages; employment; worker and firm heterogeneity; credit supply and demand
JEL Codes: J31; E24; J23; E51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| credit supply (E51) | wages (J31) |
| credit supply (E51) | employment (J68) |
| negative interest rates (E43) | credit supply (E51) |
| initially lower-paid workers (J39) | leaving employment (J63) |
| higher-paid workers (J39) | wage declines (J31) |