Working Paper
Using online job postings from 2007 to 2021, the authors create a firm-level metric of local labor market concentration. Firms in more concentrated labor markets tend to have higher financial leverage. This finding is not due to correlated labor market characteristics or unobserved shocks.
The positive link between labor market concentration and leverage is weaker for firms hiring in occupations with high mobility and skill transferability. To establish causality, we use Amazon HQ2’s establishment in Crystal City, Virginia, as a shock.
Their results align with baseline findings and are robust to changes in local labor and economic dynamics.
Faculty
Professor of Finance
