In troubled times, it is crucial to understand how adverse shocks affect the economy, in particular firms and workers, in order to design evidence-based policy countermeasures.
This project aims to provide novel insights on the determinants of firms' performance in times of distress and study the impact on labor markets.
First, we will adopt a firm-level perspective to explore resilience to the exposure to financial and real crises. We will look at the main drivers of firms' success and fragility in the aftermath of the Lehman and sovereign debt shocks. Moreover, we will explore the impact of the COVID-19 outbreak on Italian firms. Specifically, we will outline the role of innovativeness and internationalization patterns, with a focus on global value chains. We will then explore the effects of one of the most relevant real shocks in developing countries: war. We will study the effect of the Second Libyan Civil War on Libyan firms' performance.
Second, we will investigate the role of firms' financial condition in their capacity to cope with shocks. We will identify various types of financial fragility and explore how their interaction with firms' strategic behaviors may affect their response to adverse conditions. In particular, we will dig deeper into policy effectiveness in a crisis by presenting evidence on credit guarantees and public incentives for innovation.
Finally, we will turn to study the labor market and labor institutions. First, we will consider Italy and investigate the role of two essential features of its economy: the collective wage setting, that makes nominal wages homogeneous across space, and the variability of prices at the local level, that makes real wages differ across areas. Second, we will look at the UK to assess the role played by another crucial institution: the minimum wage. The analysis of nominal and real wage dynamics and wage setting institutions will be relevant for assessing workers' vulnerability in troubled times.
