This paper examines the impact of labor regulations that restrict firms' flexibility to adjust labor on the cost of corporate bank loans. Using within-country variation in employment protection legislation across 25 countries, I find that increases in employment protection lead to higher loan...

We exploit the adoption of U.S. state-level labor protection laws to study the effect of employment protection on corporate investment and growth. We find that, following the adoption of these laws, capital expenditures decrease, resulting in firms growing sales at a slower rate. Our findings...