Working Paper: NBER ID: w18208
Authors: Jennifer Brown; David A. Matsa
Abstract: We use novel data from a leading online job search platform to examine the impact of corporate distress on firms’ ability to attract job applicants. Survey responses suggest that job seekers accurately perceive firms’ financial condition, as measured by companies’ credit default swap prices and accounting data. Analyzing responses to job postings by major financial firms during the Great Recession, we find that an increase in an employer’s distress results in fewer and lower quality applicants. These effects are particularly evident when the social safety net provides workers with weak protection against unemployment and for positions requiring a college education.
Keywords: job applications; corporate distress; credit default swap; labor supply; unemployment insurance
JEL Codes: G20; G32; G33; J64; M5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Corporate distress (G33) | Job applications (M51) |
| Increase in CDS prices (G19) | Job applications (M51) |
| Corporate distress (G33) | Quality of applicants (C52) |
| Weaker unemployment insurance systems (J65) | Decline in applications (J63) |
| Higher education positions (I29) | Decline in applications (J63) |
| Corporate distress (G33) | Average earnings and education levels in applicants' zip codes (I24) |