Tag: Capital structure
Capital Structure and Employment Flexibility
Author: Olga Kuzmina, NES.
This policy brief focuses on the relationship between employment policies and their potential impact on firms’ decisions and outcomes. In particular, the question dealt with here is whether policies aiming to promote job stability could have an impact on a firm’s capital structure and the ability to respond to negative shocks and survive. The policy implications of this relationship are important since policy makers, while aiming to promote job stability among workers, may in fact inadvertently harm firms by leaving them less able to withstand downturns, and especially those firms that cannot quickly adjust their capital structure.