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Article dans une revue Journal of the European Economic Association Année : 2009

Credit, wages and bankruptcy laws

Résumé

We analyze how bankruptcy laws affect the general equilibrium interactions between credit and wages. Soft laws reduce the frequency of liquidations and thus ex post inefficiencies, but they worsen credit rationing ex ante. This hinders firm creation and thus depresses labor demand. Rich agents who need few outside funds can invest even if creditor rights are weak. Hence, they favor soft laws that exclude poorer agents from the credit market and reduce the competition for labor. Such laws can generate greater utilitarian welfare than under perfect contract enforcement: By barring access to credit to some agents, soft laws lower wages, which increases the pledgeable income of richer agents and decreases the liquidation rates they must commit to. When they induce strong credit rationing, however, soft laws are Pareto-dominated by tougher laws combined with subsidies to entrepreneurs
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Dates et versions

halshs-00491756, version 1 (14-06-2010)

Identifiants

  • HAL Id : halshs-00491756 , version 1
  • PRODINRA : 245709

Citer

Bruno Biais, Thomas Mariotti. Credit, wages and bankruptcy laws. Journal of the European Economic Association, 2009, 7 (5), pp.939-973. ⟨halshs-00491756⟩
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Dernière date de mise à jour le 06/04/2024
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