← Search

Journal of Finance Vol. 75 No. 6 2020

The Employment Effects of Faster Payment: Evidence from the Federal Quickpay Reform

Jean-Noël Barrot1; Ramana Nanda2,3,4,5,6,7,8,1

1 HEC Paris · 2 Karen Hospital · 3 Yango University · 4 Finance and Economics Institute of Tajikistan · 5 East Harlem Tutorial Program · 6 Woodruff Scientific (United States) · 7 S:t Eriks Ögonsjukhus · 8 HEC Paris in Qatar

Abstract

We study the impact of Quickpay , a reform that permanently accelerated payments to small business contractors of the U.S. government. We find a strong direct effect of the reform on employment growth at the firm level. However, we document substantial crowding out of nontreated firms' employment within local labor markets. While the overall net employment effect is positive, it is close to zero in tight labor markets. Our results highlight an important channel for alleviating financing constraints in small firms, but emphasize the general‐equilibrium effects of large‐scale interventions, which can lead to lower aggregate outcomes depending on labor market conditions.

DOI
10.1111/jofi.12955
Volume
75
Issue
6
Pages
3139-3173
Language
en
Sources
bibtex:phds-export.bib openalex crossref

Cite