Monetary policy, labor income redistribution and the credit channel: evidence from matched employer-employee and credit registers

Jasova, Martina; Mendicino, Caterina; Panetti, Ettore; Peydró, José-Luis; Supera, Dominik

Monetary policy, labor income redistribution and the credit channel: evidence from matched employer-employee and credit registers

Citation

Jasova, M, Mendicino, C, Panetti, E, Peydró, J, Supera, D. Monetary policy, labor income redistribution and the credit channel: evidence from matched employer-employee and credit registers. 2023. handle: http://hdl.handle.net/10230/52783

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Abstract

We document the heterogeneous effects of monetary policy on labor market outcomes via credit channel. Using employee-employer and credit registers in Portugal, we show that falling rates increase wages, hours worked and employment more in financially constrained small and young firms. Consistent with the capital-skill complementarity mechanism, we document an increase in the skill premium and show that financially constrained firms increase both physical and human capital investment the most. We uncover a central role of the credit channel with stronger state-dependent effects during crises. The effects are fully driven by firms with bank credit.