Jasova, MartinaMendicino, CaterinaPanetti, EttorePeydró, José-LuisSupera, Dominik2022-03-282022-03-282023-03http://hdl.handle.net/10230/52783We 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.application/pdfenginfo:eu-repo/semantics/workingPaperMonetary policyLabor income inequalityFirm balance sheet channelBank lending channelCapital-skill complementarityinfo:eu-repo/semantics/openAccess