And yet, they last

: the employment and productivity effects of crises on firms in Portugal

Abstract

This thesis examines the dynamic firm-level effects of the 2008 global financial crisis (GFC), the driving mechanisms of their persistence, and the linked labor (and factor) productivity dynamics. It proposes a simple dynamic macroeconomic model and uses administrative longitudinal matched employer-employee data for Portugal over 2004–17 to identify firm level, crisis-induced employment and productivity impacts and channels. Exploring the quasi-experimental variation in each firm’s foreign demand resulting from the 2008 GFC, the thesis shows that while there was a significant effect on firm exits, there was also a strong effect on the diversification of external markets among continuing firms. These firms responded by adjusting the composition of their labor force towards more skilled labor, consistent with a lasting reduction in employment. Overall, this thesis finds evidence that the effects of the GFC were felt on revenues, employment, and productivity for half a decade after the shock hit, suggesting that transitory shocks entail “scarring effects” for firms (not just workers). Finally, the thesis documents that despite negative effects on individual labor (and factor) productivity, the GFC fostered the survival of the fittest with potential “cleansing effects” at the aggregate level.

Date of Award	29 Apr 2021
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Isabel Horta Correia (Supervisor) & Joana Silva (Co-Supervisor)