Labour market flexibility during financial crises: Firm-level evidence from Spain

a column by Luc Laeven, Peter McAdam and Alexander Popov for VOX: CEPR’s Policy Portal

There are good arguments both in favour and against the idea that more labour market flexibility will deliver benefits to an economy during a downturn.

This column presents novel evidence on this question, using data from Spain during the 2008–09 credit crunch.

The results show that credit-constrained firms grow faster if they are subject to less strict firing and hiring restrictions, as long as they are technologically able to substitute labour for capital. The findings provide an argument in favour of more flexible labour laws.

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Blame wrongly aportioned

via The Adam Smith Institute Blog on 9 October

Here's an excellent piece by Thomas J DiLorenzo on who really got us into the credit mess – American politicians and regulators.

Read in full

Hazel's comment:
If you lend money to someone who can't repay it you're in trouble, but not big trouble because it's only one someone and you sort of expected that there might be a problem so you ensured that you could afford to lose the money.

If you're a bank and you are told to lend money to lots of someones that you suspect may have difficulty in repaying the money you lend them then you're in the shit!

And so are the rest of us because the misery got spread around because of global banking.

And it is still happening in a small way. Buy now, pay later screams the advert. No credit checks made!

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