Corporate Financial Constraints, Minimum Wage Policies, and Employment

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ID: 328399
2026
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Abstract
Abstract We examine how corporate financial constraints shape firms’ employment responses to minimum wage policies. Exploiting the federal minimum wage increase during the financial crisis and variation in firms’ debt maturity structures at the crisis onset, we find that financially constrained firms significantly reduce employment. To assess external validity, we analyze staggered state-level minimum wage increases over time. Consistent with the crisis evidence, employment declines in establishments of constrained firms, whereas unconstrained firms expand in areas with a larger supply of minimum-wage workers and higher turnover. Our results highlight the central role of financial constraints in mediating labor policy effects.
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openalex_W7212263322 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Alona Bilokha, Iftekhar Hasan, Stefano Manfredonia, Ronald W Masulis
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Journal review of financial studies
Year 2026
DOI
10.1093/rfs/hhag075
URL
https://doi.org/10.1093/rfs/hhag075
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