Financial and labor market imperfections and investment

Enrico Saltari, University of Rome La Sapienza. Italy
Giorgio Calcagnini, University of Urbino
Germana Giombini, University of Urbino

Abstract

This paper analyses how financial and labor market imperfections jointly influence investment. The contemporaneous presence of imperfections gives rise to a negative correlation between EPL and investment. Our results support the policies promoted by European institutions to reform both markets.