Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
The paper analyses the interaction between capital structure and employment decisions of firms. For this purpose, a theoretical model is developed in which a firm determines employment along an optimal path taking into account financial considerations. The empirical analysis using West German micro data proves that a negative relationship exists between employment and the debt asset ratio of the firm. We also demonstrate that as real wages (sales) increase, employment decreases (increases).