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Labor demand and finance

In this project, we study whether and how forms' financial constraints affect employment decisions. We focus on the Great Recession in France, when the credit supply shrinkage lead to an important lack of external finance. We leverage the natural experiment induces by the French hiring credit "0-charges" (Cahuc et al., 2018). Small firms (with less than 10 employees in 2018) were eligible to a reduction of employers' social contribution for wage paid to new hires in 2009. This amounts to a 12% decrease in labor cost for workers hired at the min wage level. Using a diff-in-diff strategy around the firm size threshold, we can identify labor demand elasticity. While the research in Cahuc et al. (2018) focuses on average elasticity, this project focuses on the heterogeneity of the elasticity by firms' credit constraint. Moreover, we will also investigate the effects of the hiring credits on financial access (using CIPE, SCR and M-CONTRAN), in the short and medium run.