The Employment Effects of Faster Payment: Evidence from the Federal Quickpay Reform
Corresponding Author
JEAN-NOËL BARROT
Correspondence: Jean-Noël Barrot, Department of Finance, HEC Paris, 1, rue de la Libération, 78350 Jouy-en-Josas, France; e-mail: barrot@hec.fr.
Search for more papers by this authorRAMANA NANDA
Jean-Noël Barrot is at HEC Paris. Ramana Nanda is at Harvard Business School and a Visiting Professor at Imperial College London. We are indebted to Editor Amit Seru and two anonymous referees for helpful comments. We are grateful to Manuel Adelino; Oriana Bandiera; Nittai Bergman; Emily Breza; Hui Chen; Erik Hurst; Mauricio Larrain; Erik Loualiche; Karen Mills; Ben Pugsley; David Robinson; Antoinette Schoar; Scott Stern; John Van Reenen; David Thesmar; Chris Woodruff; Liu Yang; Eric Zwick; and participants at the NBER Entrepreneurship and Economic Growth Conference, Toulouse School of Economics, MIT Finance lunch, HEC, INSEAD, Toulouse School of Economics, LSE, Maryland Junior Finance Conference, Georgia Tech, NBER Corporate Finance, American Finance Associations meetings, Sciences Po, NBER Summer Institute Entrepreneurship meeting, and NYU for helpful feedback. We are also grateful to the U.S. Department of Defense for sharing data on the timing of payments from their MOCAS accounting system and to Paynet for providing us data on loan delinquencies. Barrot recognizes support from the Kauffman Foundation Junior Faculty Fellowship and MIT Sloan. Nanda thanks the Division of Research and Faculty Development at HBS for financial support. All errors are our own. We have read The Journal of Finance disclosure policy and have no conflicts of interest to disclose.
Search for more papers by this authorCorresponding Author
JEAN-NOËL BARROT
Correspondence: Jean-Noël Barrot, Department of Finance, HEC Paris, 1, rue de la Libération, 78350 Jouy-en-Josas, France; e-mail: barrot@hec.fr.
Search for more papers by this authorRAMANA NANDA
Jean-Noël Barrot is at HEC Paris. Ramana Nanda is at Harvard Business School and a Visiting Professor at Imperial College London. We are indebted to Editor Amit Seru and two anonymous referees for helpful comments. We are grateful to Manuel Adelino; Oriana Bandiera; Nittai Bergman; Emily Breza; Hui Chen; Erik Hurst; Mauricio Larrain; Erik Loualiche; Karen Mills; Ben Pugsley; David Robinson; Antoinette Schoar; Scott Stern; John Van Reenen; David Thesmar; Chris Woodruff; Liu Yang; Eric Zwick; and participants at the NBER Entrepreneurship and Economic Growth Conference, Toulouse School of Economics, MIT Finance lunch, HEC, INSEAD, Toulouse School of Economics, LSE, Maryland Junior Finance Conference, Georgia Tech, NBER Corporate Finance, American Finance Associations meetings, Sciences Po, NBER Summer Institute Entrepreneurship meeting, and NYU for helpful feedback. We are also grateful to the U.S. Department of Defense for sharing data on the timing of payments from their MOCAS accounting system and to Paynet for providing us data on loan delinquencies. Barrot recognizes support from the Kauffman Foundation Junior Faculty Fellowship and MIT Sloan. Nanda thanks the Division of Research and Faculty Development at HBS for financial support. All errors are our own. We have read The Journal of Finance disclosure policy and have no conflicts of interest to disclose.
Search for more papers by this authorABSTRACT
We study the impact of Quickpay, a reform that permanently accelerated payments to small business contractors of the U.S. government. We find a strong direct effect of the reform on employment growth at the firm level. However, we document substantial crowding out of nontreated firms' employment within local labor markets. While the overall net employment effect is positive, it is close to zero in tight labor markets. Our results highlight an important channel for alleviating financing constraints in small firms, but emphasize the general-equilibrium effects of large-scale interventions, which can lead to lower aggregate outcomes depending on labor market conditions.
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