Credit Supply Shocks and Their Moderating Effects on Employment and Wages in Brazil

Credit Supply Shocks and Their Moderating Effects on Employment and Wages in Brazil

• Autor
• José Marcelo Cardoso de Lima Filho
• Co-autores
• Michel Alexandre da Silva , João Frois Caldeira
• Resumo

• This paper provides a firm-level analysis of the impact of credit supply shocks on employment and wages among Brazilian firms, paying particular attention to the moderating role of financial leverage. We estimate the propagation of credit shocks between 2013 and 2022, as well as the variation of their effects across different phases of the credit cycle. Our findings suggest that the impact of a credit shock on employment is significant only in macroeconomic contexts of financial stress, and is heavily dependent on the degree of leverage of the firms in question. By contrast, wage rigidity in normal conditions, and even during recessions, differ from the flexibility observed during the pandemic, when institutional changes and simultaneous shocks encouraged wage reductions. 

• Palavras-chave
• credit supply shocks, employment, wages, Brazilian firms.
• Modalidade
• Comunicação oral
• Área Temática
• Finanças Corporativas e Bancárias

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