The impact of credit shocks on the European labour market

Figures & data

Table 1. Share of firms in manufacturing, trade and business services, who viewed that credit access problem in 2010–2013 (as described in the credit accessibility questions) was relevant or very relevant, %.

	Credit was NOT available to			Credit was available to
	finance working capital	finance new investment	refinance debt	finance working capital,	finance new investment,	refinance debt,
				but conditions were too onerous
AT	5.4	3.6	1.5	4.3	2.0	0.9
BE	16.3	20.8	15.9	17.7	18.0	12.0
BG	52.2	51.5	44.3	53.4	52.6	49.6
CY	36.8	35.0	30.8	35.7	31.0	28.9
CZ	12.3	13.7	10.5	18.2	18.5	15.2
DE	10.0	9.2	8.9	7.7	6.6	5.9
EE	11.0	13.3	7.3	14.1	13.3	8.0
ES	32.5	32.8	29.5	38.4	38.2	34.3
FR	14.0	16.1	11.4	8.2	8.3	6.7
GR	56.3	53.1	46.5	54.2	41.9	46.2
HR	30.9	28.7	22.1	39.3	41.1	35.3
HU	9.1	10.5	9.5	26.5	26.4	24.4
IT	29.3	39.2	27.0	34.9	27.6	33.4
LT	24.1	19.1	12.3	27.9	21.4	14.6
LU	17.1	23.0	13.5	15.9	15.1	10.3
LV	33.0	22.8	17.3	28.8	24.3	18.4
MT	4.6	3.1	1.5	6.1	6.2	2.3
NL	23.4	26.2	16.8	18.4	19.4	13.5
PL	51.3	46.8	23.5	47.7	43.5	26.7
PT	31.4	31.3	25.3	42.8	40.5	33.7
RO	21.2	21.0	16.2	31.7	29.4	24.7
SI	46.4	46.6	36.7	47.3	47.4	40.9
SK	26.4	34.5	19.8	33.6	38.8	26.8
UK	28.7	26.6	21.6	24.4	24.3	24.6

Note: Frequency. Data weighted by employment weight.

Table 2. Principal component analysis of the credit difficulty measures.

Component	Eigenvalue	Difference	Proportion	Cumulative	Loading 1
1	4.353	3.605	0.726	0.726	0.403
2	0.748	0.392	0.125	0.850	0.403
3	0.356	0.110	0.059	0.910	0.404
4	0.246	0.088	0.041	0.950	0.416
5	0.158	0.018	0.026	0.977	0.411
6	0.140		0.023	1.000	0.412

Note: PCA on answers about credit difficulties, after removing variables measuring demand and volatility shocks, difficulties in customers’ ability to pay, availability of supplies, sector and size dummies.

Figure 1. Country averages of credit difficulty index and box-plot analysis of firm level variation.

Note: Sample is restricted to manufacturing, trade and business service firms.

Figure 2. Histogram of credit difficulty index.

Note: Sample is restricted to manufacturing, trade and business service firms. Data weighted to reflect an overall employment in the country.

Figure 3. Correlations of the results of SAFE survey on firms and BLS on banks, and index of credit difficulties.

Note: Panel a: Safe survey, share of firms reporting credit availability as the more pressing problem and index of credit difficulty (mean values for each country). Panel b: BLS survey, share of banks reporting a tightening in conditions and index of credit difficulty (mean values for each country).

Figure 4. Correlations between adjustments in employment (total hours worked, panel (a) and nominal hourly wages (panel b) and index of credit difficulties).

Note: National accounts (Private sector only) and index of credit difficulty (mean values for each country).

Table 3. Labour input adjustments and credit availability. Probit marginal effects.

	(1) Adjust labour input	(2) Adjust the extensive margin	(3) Adjust the intensive margin
Index of credit difficulties	0.018***	0.017***	0.010***
	[0.000]	[0.000]	[0.001]
Observations	18,139	18,282	18,282
Mean probability	0.303	0.153	0.105

Note: Robust p-values in brackets ***p < 0.01, **p < 0.05, *p < 0.1. The models include country, sector and size dummies.

Table 4. Labour input adjustments and credit availability (robustness check). Probit marginal effects.

	(1) Adjust labour input
Index of credit difficulties	0.019***	0.020***	0.018***
	[0.001]	[0.000]	[0.001]
Extra control dummies:	autonomy	ownership	structure
Observations	15,458	16,659	16,075
Mean probability	0.326	0.311	0.328
	(2) Adjust the extensive margin
Index of credit difficulties	0.019***	0.019***	0.018***
	[0.000]	[0.000]	[0.000]
Extra control dummies:	autonomy	ownership	structure
Observations	15,532	16,752	16,145
Mean probability	0.172	0.162	0.174
	(3) Adjust the intensive margin
Index of credit difficulties	0.012***	0.012***	0.011***
	[0.001]	[0.000]	[0.002]
Extra control dummies:	autonomy	ownership	structure
Observations	15,532	16,752	16,145
Mean probability	0.107	0.106	0.110

Note: The models also include country, sector and size dummies, as well as the share of labour costs in total costs, the share of flexible labour costs.

Table 5. Labour input adjustments and credit availability, by detailed method of adjustment. Probit marginal effects.

	(1) Collective layoffs	(2) Individual layoffs	(3) Temporary layoffs
Index of credit difficulties	0.002	0.017***	0.001
	[0.270]	[0.000]	[0.502]
Observations	18,133	18,134	13,403
Mean probability	0.061	0.121	0.038
	(4) Subsidized reduction of hours	(5) Not subsidized reduction of hours	(6) No renewal of temporary job contracts
Index of credit difficulties	0.004	0.010***	0.010***
	[0.143]	[0.000]	[0.003]
Observations	15,853	18,128	18,131
Mean probability	0.071	0.071	0.125
	(7) Early retirement	(8) Freeze/reduction new hire	(9) Reduction temporary work agency
Index of credit difficulties	0.003*	0.013***	0.007**
	[0.090]	[0.001]	[0.019]
Observations	17,391	18,133	18,129
Mean probability	0.044	0.170	0.099

Note: Robust p-values in brackets ***p < 0.01, **p < 0.05, *p < 0.1. The models include country, sector and size dummies.

Table 6. Wage adjustments and credit availability, base wage and variable wage components. Probit marginal effects.

	(1)	(2)	(3)
	Wages (total)	Base wages	Flexible wages
Index of credit difficulties	0.009**	0.002	0.009***
	[0.016]	[0.188]	[0.004]
Observations	18,282	18,282	18,282
Mean probability	0.142	0.050	0.123

Note: Robust p-values in brackets ***p < 0.01, **p < 0.05, *p < 0.1. The models include country, sector and size dummies.

Table 7. Credit availability and labour market adjustments by type of firm. Probit marginal effects.

	(1) Adjust labour input
Index of credit difficulties	0.005		0.028***	0.024***
	[0.565]		[0.000]	[0.000]
Interaction dummy with credit difficulty index	Autonomy (subsidiary)	Autonomy (other)	Ownership (foreign)	Structure (multi-establishment)
	0.013	0.038***	−0.026**	−0.009
	[0.322]	[0.002]	[0.049]	[0.413]
Observations	15,646		15,646	15,734
Mean probability	0.339		0.339	0.338
	(2) Adjust the extensive margin
Index of credit difficulties	0.013*		0.026***	0.018***
	[0.064]		[0.000]	[0.001]
Interaction dummy with credit difficulty index	Autonomy (subsidiary)	Autonomy (other)	Ownership (foreign)	Structure (multi-establishment)
	−0.006	0.025**	−0.025**	0.001
	[0.571]	[0.020]	[0.022]	[0.907]
Observations	15,728		15,728	15,817
Mean probability	0.181		0.181	0.181
	(3) Adjust the intensive margin
Index of credit difficulties	0.015***		0.015***	0.014***
	[0.009]		[0.000]	[0.001]
Interaction dummy with credit difficulty index	Autonomy (subsidiary)	Autonomy (other)	Ownership (foreign)	Structure (multi-establishment)
	−0.008	−0.002	−0.008	−0.008
	[0.371]	[0.755]	[0.325]	[0.258]
Observations	15,728		15,728	15,817
Mean probability	0.113		0.113	0.112

Note: Robust p-values in brackets ***p < 0.01, **p < 0.05, *p < 0.1. The models include area, country, sector and size dummies. The baseline for autonomy – parent firm, baseline for ownership – domestic firm, baseline for structure – single establishment.

Table 8. Credit availability and labour market adjustments by geographical area. Probit marginal effects.

	(1)	(2)	(3)	(4)
	Extensive margin	Intensive margin	Base wage	Flexible wage
Credit difficulties index	0.019***	0.013***	0.001	0.009**
	[0.001]	[0.006]	[0.700]	[0.036]
Southern Europe * Credit diff. Index	0.003	−0.003	0.001	0.010
	[0.751]	[0.715]	[0.835]	[0.211]
Eastern/Baltic * Credit diff. Index	−0.014*	−0.007	0.002	−0.014**
	[0.061]	[0.196]	[0.423]	[0.017]
Observations	18,282	18,282	18,282	18,282
Mean probability	0.153	0.105	0.050	0.123

Note: Robust p-values in brackets ***p < 0.01, **p < 0.05, *p < 0.1. Southern Europe includes: Spain, Italy; Greece, Portugal, Cyprus. Eastern Europe/Baltic countries includes: Czech Republic, Estonia, Croatia, Hungary, Romania, Bulgaria, Latvia, Lithuania, Poland, Slovenia, and Slovakia. The models include area, country, sector and size dummies.

Table 9. Credit availability and labour market adjustments by country. Probit marginal effects.

	(1) Extensive margin	(2) Intensive margin	(3) Base wage	(4) Flexible wage
Credit difficulties index	0.035***	0.024***	0.003	0.010
	[0.001]	[0.008]	[0.649]	[0.166]
Austria * Credit diff. Index	0.023	−0.072**	−0.019	−0.190***
	[0.469]	[0.049]	[0.211]	[0.000]
Belgium * Credit diff. Index	0.012	0.002	0.011	−0.001
	[0.453]	[0.888]	[0.217]	[0.951]
Germany * Credit diff. Index	−0.007	−0.016	0.003	0.014
	[0.585]	[0.137]	[0.681]	[0.139]
Luxemburg * Credit diff. Index	−0.042*	0.002	0.000	0.005
	[0.050]	[0.865]	[0.983]	[0.807]
Malta * Credit diff. Index	0.030	0.007	−0.055***	−0.297***
	[0.432]	[0.789]	[0.000]	[0.001]
The Netherlands * Credit diff. Index	−0.018	−0.019	−0.006	0.015
	[0.343]	[0.206]	[0.559]	[0.278]
The United Kingdom * Credit diff. Index	−0.042**	−0.015	−0.013	−0.032***
	[0.016]	[0.321]	[0.108]	[0.009]
Cyprus * Credit diff. Index	−0.034*	−0.025*	−0.007	−0.017
	[0.090]	[0.072]	[0.484]	[0.264]
Spain * Credit diff. Index	0.021	−0.015	0.003	0.018
	[0.169]	[0.268]	[0.745]	[0.160]
Greece * Credit diff. Index	−0.018	−0.022	0.002	0.004
	[0.261]	[0.141]	[0.841]	[0.746]
Italy * Credit diff. Index	−0.039**	−0.014	−0.009	0.004
	[0.027]	[0.285]	[0.345]	[0.780]
Portugal * Credit diff. Index	−0.020	−0.004	−0.001	−0.005
	[0.138]	[0.747]	[0.919]	[0.597]
Bulgaria * Credit diff. Index	−0.002	−0.006	0.005	−0.000
	[0.920]	[0.645]	[0.519]	[0.980]
Czechia * Credit diff. Index	−0.025*	−0.016	0.004	−0.014
	[0.052]	[0.144]	[0.616]	[0.149]
Estonia * Credit diff. Index	−0.015	−0.018	−0.004	−0.017
	[0.414]	[0.223]	[0.707]	[0.330]
Croatia * Credit diff. Index	−0.027	−0.012	0.003	0.000
	[0.110]	[0.430]	[0.719]	[0.998]
Hungary * Credit diff. Index	−0.004	0.001	0.006	−0.007
	[0.745]	[0.935]	[0.456]	[0.451]
Lithuania * Credit diff. Index	−0.011	−0.024**	−0.016	−0.035**
	[0.598]	[0.039]	[0.117]	[0.027]
Latvia * Credit diff. Index	−0.021	−0.021	0.000	0.007
	[0.214]	[0.141]	[0.966]	[0.614]
Poland * Credit diff. Index	−0.035**	−0.017	−0.004	−0.029**
	[0.011]	[0.100]	[0.633]	[0.021]
Romania * Credit diff. Index	−0.030***	−0.016	−0.001	−0.000
	[0.010]	[0.107]	[0.913]	[0.996]
Slovenia * Credit diff. Index	−0.030**	−0.028**	0.003	−0.004
	[0.017]	[0.021]	[0.650]	[0.626]
Slovakia * Credit diff. Index	−0.045*	−0.056***	−0.003	−0.034**
	[0.054]	[0.001]	[0.712]	[0.029]
Observations	18,282	18,282	18,282	18,282
Mean probability	0.154	0.105	0.050	0.123

Note: Robust p-values in brackets *** p < 0.01, ** p < 0.05, * p < 0.1. Base country – France. The models include area, country, sector and size dummies.

Figure 5. Correlations between the change in credit supply and the index of credit difficulties.

Note: Credit supply (measured on credit registers and normalized between zero and one in both countries) and index of credit difficulty.

Table 10. Italy and France. Alternative index of credit supply and labour market adjustments. Pooled data.

	(1)	(2)	(3)	(4)	(5)
	Index of credit difficulties	Extensive margin	Intensive margin	Base wage	Flexible wage
Alternative index of credit supply	−1.212**	−0.009***	−0.008***	−0.001	−0.008***
	[0.000]	[0.001]	[0.004]	[0.277]	[0.003]
Observations	1558	1558	1558	1603	1603

Note: Index of credit supply, based on credit registers. Robust p-values in brackets ***p < 0.01, **p < 0.05, *p < 0.1. The models include country, sector and size dummies.

Table A1. Survey sample by country, sector and size (firms that provided answers about credit availability).

Country	Number of firms that provided answers about credit availability (all sectors)	Share of firms in manufacturing, trade or business services (%)	Firms in manufacturing, trade or business services								Average item non-response (% of total number of firms)
			Distribution by sector (%)			Distribution by employee number (%)					for credit availability questions	for labour input adjustment questions
			Manufacturing	Trade	Business services	<5	5–19	20–49	50–199	200 and >
AT	744	83.9	34.8	25.8	39.4	0.6	18.1	22	31.6	27.7	1.9	3.2
BE	958	77.5	54.3	14.8	30.9	–	22.8	23.9	42.6	10.8	2.1	0.6
BG	507	75.9	14	59.5	26.5	–	72.5	18.2	7	2.3	1.4	0
CY	167	85	22.5	32.4	45.1	26.1	41.5	15.5	9.9	7	5.4	2.6
CZ	944	91.5	54.5	16.1	29.4	–	15.4	18.9	25.8	39.9	4.7	1.8
DE	2297	80.8	34	28.1	37.9	9.2	24	28	27.2	11.7	3.8	2.9
EE	500	76.6	35	24	41	–	36	34.7	23.2	6	0	0
ES	1975	99.1	25.9	30.7	43.5	–	73.1	18	6.6	2.3	0	0
FR	1120	85.4	51.4	25.2	23.4	–	18.4	22.2	27.7	31.7	2.6	0.8
GR	348	100	39.4	35.3	25.3	–	11.2	36.2	34.8	17.8	11.5	2.0
HR	301	90.4	42.6	21	36.4	–	30.1	25.7	33.1	11	0	0
HU	1782	90.1	43.7	23.6	32.7	–	10.5	29.5	40.1	19.9	9.2	0
IT	919	97.6	51.7	21.1	27.2	–	6.7	51.4	29	12.5	8.3	0.5
LT	515	77.3	19.1	42.5	38.4	–	57.5	19.3	18.3	4.8	0	0
LU	661	64.9	17.2	35.9	46.9	23.5	35.7	21.9	14.9	4	1.3	0
LV	463	85.3	20.8	36.7	42.5	–	47.6	25.8	20.8	5.8	8.6	0
MT	178	73	24.6	20	55.4	–	13.8	24.6	37.7	23.8	0	0
NL	727	58.2	22.9	34.8	42.3	–	45.6	25.8	24.3	4.3	0	0
PL	1414	84.4	33.9	34	32.1	20.8	27.9	15.3	22.4	13.7	3.5	4.8
PT	1261	70.9	47.5	20.4	32.1	–	13.4	23.6	36.4	26.6	3.7	0
RO	2030	89.4	60.4	16.1	23.5	–	–	8.2	14.7	77.1	0.4	0.1
SI	1269	80.9	40.8	20.1	39.1	–	48.3	20	20.5	11.2	0	0
SK	601	84.7	37.3	24.4	38.3	–	25.9	27.3	32.6	14.1	2.1	0
UK	395	72.4	23.1	19.2	57.7	5.6	6.6	24.1	28.7	35	29.6	0.8

Table A2. List of the WDN3 questions used in this paper.

Credit availability	With regard to finance, please indicate for 2010–2013 how relevant were for your firm each one of the following happenings? Please choose ONE option for each line (not relevant, of little relevance, relevant, very relevant). Note: Credit here refers to any kind of credit, not only bank credit. Credit was not available to finance working capital Credit was not available to finance new investment Credit was not available to refinance debt Credit was available to finance working capital, but conditions (interest rate and other contractual terms) were too onerous Credit was available to finance new investment, but conditions (interest rate and other contractual terms) were too onerous Credit was available to refinance debt, but conditions (interest rate and other contractual terms) were too onerous
Labour force adjustment	During 2010–2013 did you need to significantly reduce your labour input or to alter its composition? (Yes/No) If YES, which of the following measures did you use to reduce your labour input or alter its composition when it was most urgent? Please choose ONE option for each line (not at all, marginally, moderately, strongly) Collective layoffs Individual layoffs Temporary layoffs (NOT asked in: CZ, DE, EE, IT, LT, LV and MT) Subsidized reduction of working hours (NOT asked in EE, LT, LV, UK and PT) Non-subsidized reduction of working hours (including reduction of overtime) Non-renewal of temporary contracts at expiration Early retirement schemes (NOT asked in EE) Freeze or reduction of new hires Reduction of agency workers and others
Change in economic conditions	How did the following factors affect your firm’s activity during 2010–2013? Please choose ONE option for each line (Strong decrease, Moderate decrease, Unchanged, Moderate increase, Strong increase) The level of demand for your products/services Volatility/uncertainty of demand for your products/services Customers’ ability to pay and meet contractual terms Availability of supplies from your usual suppliers

Table A3. Share of firms in manufacturing, trade and business services, who reported need to reduce labour input or alter its composition; and use of labour adjustment measures by corresponding firms, %.

Country	Need to significantly reduce labour input or to alter its composition?		If YES, which of the following measures did you use to reduce your labour input or alter its composition when it was most urgent? *						Negative wage adjustment *
	No	Yes	Extensive margin (collective or individual layoffs)	Intensive margin (subsidized or non-subsidized reduction of working hours)	Non-renewal of temporary contracts at expiration	Freeze of new hires	Temporary layoff	Early retirement	Base wage	Flexible wage
AT	76.2	23.8	35.5	40.8	4.1	55.2	9.1	1.7	1.8	14.2
BE	59.8	40.2	44.8	11.9	33.3	62.7	37.7	15.0	5.4	3.8
BG	76.2	23.8	58.6	11.5	27.6	62.5	31.3	15.4	25.9	38.6
CY	48.6	51.4	40.7	25.9	19.3	49.3	13.5	7.7	83.1	83.9
CZ	63.6	36.4	55.9	21.9	38.4	58.0	–	13.0	9.7	31.1
DE	78.4	21.6	41.1	45.4	28.1	42.9	–	13.3	9.4	8.6
EE	86.7	13.3	43.4	29.2	13.0	42.0	–	–	22.7	23.4
ES	54.1	45.9	53.6	29.1	49.2	32.6	24.7	18.4	12.4	44.8
FR	74.3	25.7	51.2	30.3	47.4	74.4	4.9	7.4	4.4	22.3
GR	44.7	55.3	36.5	32.7	19.1	59.9	2.8	6.4	78.4	66.8
HR	60.5	39.5	50.6	11.7	45.7	33.5	8.2	29.5	29.6	38.2
HU	84.2	15.8	42.4	19.8	24.7	29.9	12.0	16.8	8.4	32.0
IE	65.8	34.2	42.1	43.2	23.9	52.2	12.1	3.4	25.2	34.9
IT	53.4	46.6	53.5	69.8	53.1	71.1	–	21.8	5.9	30.0
LT	80.9	19.1	23.5	13.8	25.0	36.0	–	3.1	16.6	18.9
LU	74.4	25.6	34.6	16.2	36.5	50.2	4.3	19.6	7.7	37.4
LV	77.3	22.7	26.7	21.6	10.5	22.8	–	1.5	19.7	12.2
MT	76.0	24.0	18.8	23.5	17.8	41.0	–	13.2	5.1	2.1
NL	48.4	51.6	48.2	8.0	53.5	51.8	1.4	9.4	21.8	37.7
PL	61.7	38.3	65.2	30.7	53.0	72.7	18.8	24.8	8.7	17.0
PT	74.9	25.1	52.3	28.7	61.8	74.3	6.2	12.9	23.0	39.9
RO	73.8	26.2	61.0	35.1	31.5	57.5	13.5	11.5	10.2	23.8
SI	74.0	26.0	47.0	19.6	42.8	49.3	10.8	20.1	32.0	48.6
SK	66.4	33.6	80.6	23.4	38.4	75.3	8.4	23.4	7.9	36.3
UK	78.3	21.7	55.3	18.9	13.5	47.3	2.1	2.3	6.1	23.8

Note: * - share of firms, of those, who reported necessity to reduce labour input or its composition, and used a particular type of labour adjustment moderate or strongly. Sample is restricted to manufacturing, trade and business service firms. Data weighted to reflect an overall employment in the country.