Collateral Values and Corporate Employment
We analyze how local financial shocks influence employment outcomes within firms and how these effects show up in the aggregate. Our empirical strategy uses variation in real estate price growth, real estate holdings, and establishment-level employment from the U.S. Census Bureau. We estimate that employment expenditures increase by $0.10 per $1 increase in real estate collateral values among U.S. publicly-traded firms. Within-firm increases in employment occur at establishments away from the location of real estate holdings leading to regional employment spillovers. Our findings indicate that the geography of firms’ establishments is an important channel through which local financial shocks spread across U.S. regions.