Premium
Capital Structure and Labour Demand: Investigations Using German Micro Data
Author(s) -
Funke Michael,
Maurer Wolf,
Strulik Holger
Publication year - 1999
Publication title -
oxford bulletin of economics and statistics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.131
H-Index - 73
eISSN - 1468-0084
pISSN - 0305-9049
DOI - 10.1111/1468-0084.00125
Subject(s) - german , economics , asset (computer security) , debt , capital structure , capital (architecture) , labour economics , panel data , path (computing) , econometrics , monetary economics , macroeconomics , archaeology , history , computer security , computer science , programming language
The paper analyses the interaction between capital structure and employment decisions of firms. For this purpose, a theoretical model is developed in which a firm determines employment along an optimal path taking into account financial considerations. The empirical analysis using West German micro data proves that a negative relationship exists between employment and the debt asset ratio of the firm. We also demonstrate that as real wages (sales) increase, employment decreases (increases).