Gabriel Züllig

job market seminar

Gabriel Züllig

University of Oxford
Heterogeneous employment effects of firms’ financial constraints and wageless recoveries
Friday, January 21 2022| 11:30am to 12:45pm

Frédéric Deroïan: frederic.deroian[at]


This paper studies the interaction of employment and wages in light of credit supply disruptions. Using a combination of administrative bank-firm-worker datasets from Denmark, I first establish that firms borrowing from banks highly exposed to the money market prior to the Global Financial Crisis received a shock to external liquidity, relative to otherwise similar firms. This led to a drop in employment of 5% at these firms, but almost no movement of average wages. Separation rates increase most for workers with the highest initial wages. This is not explained by higher wage stickiness at the top of the wage distribution. Comparing my findings to a benchmark shock, I find that the higher separation rates for high-wage workers are directly related to firms’ liquidity needs. Employees separated from jobs with high wages are re-employed quickly, albeit at lower wages. This leads to sluggish wage growth even in unconstrained firms, and well into the recovery after a financial recession, implying a flattening of the Phillips curve.

More information