Capital Structure and Labour Demand: Investigations Using German Micro Data |
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Authors: | Michael Funke Wolf Maurer & Holger Strulik |
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Institution: | Hamburg University,;Hamburg University,;Hamburg University |
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Abstract: | 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). |
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