This paper examines the impact of labor unemployment risk on corporatefinancing decisions. Theory suggests that firms choose conservativefinancial policies partly as a means of mitigating worker exposure tounemployment risk. Using changes in state unemployment insurance benefitlaws as a source...

This paper presents evidence that firms choose conservative financial policies partly to mitigate workers' exposure to unemployment risk. We exploit changes in state unemployment insurance laws as a source of variation in the costs borne by workers during layoff spells. We find that higher...

This paper presents evidence that firms choose conservative financial policies partly to mitigate workers' exposure to unemployment risk. We exploit changes in state unemployment insurance laws as a source of variation in the costs borne by workers during layoff spells. We find that higher...