ABSTRACT We show that labor search frictions are an important determinant of the cross‐section equity returns. Empirically, we find firms with low loadings on market tightness outperform high by 6% annually. propose a partial equilibrium model in which heterogeneous make dynamic employment decisions under frictions. In model, proxy for priced time‐variation efficiency aggregate matching technology. Firms more exposed to adverse shocks and require higher expected stock

The National Banking Acts (NBAs) of 1863–1864 established rules governing the amounts and locations interbank deposits, thereby reshaping bank networks. Using unique data on balance sheets detailed deposits in 1862 1867 Pennsylvania, we study how NBAs changed network structure quantify effect financial stability an model. We find that induced a concentration at both city levels, creating systemically important banks. Although facilitated diversification, contagion would have become more...

This paper develops a framework for designing collateral requirements in centrally cleared market. Clearing members post collateral—initial margins and default funds—to increase their pledgeable income, thereby committing to risk management. The two types of collateral, however, are not perfect substitutes. By achieving loss mutualization, funds economically more efficient than initial aligning members’ incentives management ex ante. optimal mix resources balances the efficiency providing...

Using an occupational probability of computerization, we measure a firm’s ability to replace labor with automated capital. Our evidence suggests that the potential automate workforce enhances operating flexibility, allowing firms hold less precautionary cash. To provide for this mechanism, exploit 2011–2012 Thailand hard drive crisis as exogenous shock cost automation. In addition, negative relation between prospective automation and cash holdings is greater lower expected worker...

I develop a model of contagion that stems from endogenous risk-sharing when financial firms differ in distress levels. Firms face costly liquidation and strategically trade assets, thereby forming links. A link with distressed firm can be socially as it raises system-wide risk. When are highly dispersed distress, the network composition is distorted two ways: features too many links few among non-distressed firms. This inefficiency arises an externality bilateral trading terms not contingent...

The reserve requirements established by the National Banking Acts (NBAs) dictated amounts and locations of interbank deposits, thereby reshaping structure U.S. bank networks. Using unique data on balance sheets, along with detailed deposits in 1862 1867 Pennsylvania, we study how NBAs changed network structure. Further, quantify effect financial stability a model networks liquidity withdrawal. We find that led to concentration at both city level, creating systemically important banks major...

We show that firms' ability to substitute automated capital for labor provides an option reduce labor-induced operating leverage, allowing less conservative financial policies. Using occupational measure of labor's susceptibility automation, we find firms with a more substitutable workforce hold cash, use and pay higher dividends. provide causal evidence by exploiting the 2011–2012 Thailand hard drive crisis as shock cost automation. Following adverse shocks cash flow from state tax...

We show that the social capital embedded in employees’ networks contributes to firm performance. Using novel, individual-level network data, we measure a firm’s derived from connections with external stakeholders. Our directed data allow for differentiating those know employee and knows. Results firms more perform better; positive effect stems primarily employees being known by others. provide causal evidence exploiting enactment of government regulation imparted negative shock networking...

Using an occupational probability of computerization, we measure a firm’s ability to replace labor with automated capital. Our evidence suggests that the potential automate workforce enhances operating flexibility, allowing firms hold less precautionary cash. To provide for this mechanism, exploit 2011–2012 Thailand hard drive crisis as exogenous shock cost automation. In addition, negative relation between prospective automation and cash holdings is greater lower expected worker...

Abstract This article provides new evidence on how access to finance affects technological innovation and establishes the role of labor practices in shaping this relation. We exploit a unique setting, pre-Civil War America, where staggered adoption free banking laws across states encouraged bank entry, variation use exploited workers agriculture generated differences producers’ demands for labor-saving technologies. Results show that spurred innovation; positive effect agricultural...

The reserve requirements established by the National Banking Acts (NBAs) dictated amounts and locations of interbank deposits, thereby reshaping structure U.S. bank networks. Using unique data on balance sheets, along with detailed deposits in 1862 1867 Pennsylvania, we study how NBAs changed network structure. Further, quantify effect financial stability a model networks liquidity withdrawal. We find that led to concentration at both city level, creating systemically important banks major...

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This paper provides new evidence on how access to finance affects technological innovation and establishes the role of labor practices in shaping this relation. We exploit a unique setting—pre-Civil War America—where staggered adoption free banking laws across states encouraged bank entry, variation use exploited workers agriculture generated differences producers' demands for labor-saving technologies. Results show that spurred innovation; positive effect agricultural diminished with...

The National Banking Acts (NBAs) of 1863-1864 established rules governing the amounts and locations interbank deposits, thereby reshaping bank networks. Using unique data on balance sheets detailed deposits in 1862 1867 Pennsylvania, we study how NBAs changed network structure quantify effect financial stability an model. We find that induced a concentration at both city levels, creating systemically important banks. Although facilitated diversification, contagion would have become more...

This paper develops a framework for designing collateral requirements in centrally cleared market. Clearing members post collateral—initial margins and default funds—to increase their pledgeable income, thereby committing to risk management. The two types of collateral, however, are not perfect substitutes. By achieving loss mutualization, funds economically more efficient than initial aligning members' incentives management ex ante. optimal mix resources balances the efficiency providing...

We show that labor search frictions are an important determinant of the cross section equity returns. In data, sorting firms by loadings on market tightness, key statistic models, generates a spread in future returns 6\% annually. propose partial equilibrium model which heterogeneous make optimal employment decisions under frictions. model, tightness proxy for priced time variation efficiency matching technology. Firms with low not hedged against adverse shocks and require higher expected stock

This paper studies the optimal taxation of top labor incomes. Top income earners are modeled as managers who operate a span control technology in Rosen (1982). Managers heterogeneous their talent. Effort and talent manager privately observed. Managerial increases managers’ productivity effort overall firm productivity, creating scale-of-operations effect. A tax formula for taxes is derived linking marginal rates to preferences technology. The model calibrated using US level data. Our...