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  • December 2020
  • Article
  • Journal of Finance

The Employment Effects of Faster Payment: Evidence from the Federal Quickpay Reform

By: Jean-Noel Barrot and Ramana Nanda
  • Format:Print
  • | Pages:35
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Abstract

We study the impact of Quickpay, a federal reform that indefinitely accelerated payments to small business contractors of the U.S. government. We find a strong direct effect of the reform on employment growth at the firm level. Importantly, however, we also document substantial crowding out of non-treated firms' employment within local labor markets. While the overall net employment effect was positive, it was close to zero in tight labor markets—where crowding out was stronger. Our results highlight an important channel for alleviating financing constraints in small firms but also emphasize the general-equilibrium effects of large-scale interventions, which can lead to lower aggregate outcomes depending on labor market conditions.

Keywords

Small Business; Employment; Business and Government Relations; Governing Rules, Regulations, and Reforms

Citation

Barrot, Jean-Noel, and Ramana Nanda. "The Employment Effects of Faster Payment: Evidence from the Federal Quickpay Reform." Journal of Finance 75, no. 6 (December 2020): 3139–3173.
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About The Author

Ramana Nanda

Entrepreneurial Management
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