The labor effects of judicial bias in bankruptcy*

• 成果类型: Article
• 署名作者: Araujo, Aloisio; Ferreira, Rafael; Lagaras, Spyridon; Moraes, Flavio; Ponticelli, Jacopo; Tsoutsoura, Margarita
• 署名单位: Getulio Vargas Foundation; Instituto Nacional de Matematica Pura e Aplicada (IMPA); Pennsylvania Commonwealth System of Higher Education (PCSHE); University of Pittsburgh; Universidade Federal do Rio de Janeiro; Northwestern University; National Bureau of Economic Research; Washington University (WUSTL); Centre for Economic Policy Research - UK
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2023.103720
• 发表日期: 2023
• 关键词: Brazil; wages; information frictions; Financial distress

摘要

We study the effect of judicial bias favoring firm continuation in bankruptcy on the labor market outcomes of employees by exploiting the random assignment of cases across courts in the State of Sa similar to o Paulo in Brazil. Employees of firms assigned to courts that favor firm continuation are more likely to stay with their employer, but they earn, on average, lower wages three to five years after bankruptcy. We discuss several potential mechanisms that can rationalize this result, and provide evidence that imperfect information about outside options in the local labor market and adjustment costs associated with job change play an important role.