Author: Efraim Benmelech ；Nittai K. Bergman ；Amit Seru

ABSTRACT：Financial market imperfections can have significant impact on employment decisions of firms. We
illustrate the economic importance of this channel by demonstrating that the responsiveness of employment
decisions to firms’ financial health is quantitatively similar to the much-studied responsiveness of
investment decisions to cash-flows. We use a collage of three ‘quasi-experiments’ used previously
in the investment-cash flow and finance-growth literatures to trace the effects of finance on employment.
Our results suggest that financial constraints and the availability of credit play an important role in
firm-level employment decisions, as well as aggregate unemployment outcomes

Efraim Benmelech
Harvard University
Department of Economics
Littauer 233
Cambridge, MA 02138
and NBER
effi_benmelech@harvard.edu

Amit Seru
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
and NBER
amit.seru@chicagobooth.edu

Nittai K. Bergman
MIT Sloan School of Management
100 Main Street, E62-632
Cambridge, MA 02142
and NBER
nbergman@mit.edu

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