Publications
Publications
- August 2024
- Review of Financial Studies
The Labor Market Effects of Loan Guarantee Programs
By: Jean-Noël Barrot, Thorsten Martin, Julien Sauvagnat and Boris Vallée
Abstract
We investigate the labor market effects of a loan guarantee program targeting French SMEs during the financial crisis. Exploiting differences in regional treatment intensity in a border discontinuity design, we uncover a central trade-off for such interventions. While the program has a positive impact on workers' employment and earnings trajectories which translates into positive aggregate employment effects, it dampens the worker reallocation towards more productive firms that happens following recessions, and particularly so for high-skill workers. This labor allocation effect is economically significant and translates into a reduction in aggregate productivity.
Keywords
Citation
Barrot, Jean-Noël, Thorsten Martin, Julien Sauvagnat, and Boris Vallée. "The Labor Market Effects of Loan Guarantee Programs." Review of Financial Studies 37, no. 8 (August 2024): 2315–2354.