Reference : Investor Sentiment and Employment
Scientific journals : Article
Business & economic sciences : Finance
Investor Sentiment and Employment
Montone, Maurizio mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Luxembourg School of Finance (LSF) >]
Zwinkels, Remco [Vrije Universiteit Amsterdam - VU]
Journal of Financial and Quantitative Analysis
Cambridge University Press
Yes (verified by ORBilu)
United Kingdom
[en] Investor sentiment ; Labor market ; Financial development ; Financial crises
[en] We develop a multi-country model with moral hazard and noise traders, and show that investor sentiment should affect employment growth both domestically and abroad. Using a large sample of international industry-level data, we find strong support for the model's predictions. We show that US investor sentiment has a positive association with labor market conditions around the world, due to spillover effects as well as foreign direct investments from the US. We also find that US sentiment amplifies the negative effect of local financial crises on job losses, which supports the idea that financial development has a "dark side".

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