We gratefully acknowledge the support and hospitality of our hosts, the European Central Bank. The views expressed in this paper are those of the author(s) and not those of the funding organization(s) nor of CEPR, which takes

We are grateful to the following institutions for their financial and organizational support: Institute for the Study of Labor (IZA) The views expressed in this paper are those of the author(s) and not those of the funding organization(s) or of CEPR, which takes no

We gratefully acknowledge the support and hospitality of our hosts, the European Central Bank. The views expressed in this paper are those of the author(s) and not those of the funding organization(s) nor of CEPR, which takes

We are grateful to the Banco de España for their financial and organizational support. The views expressed in this paper are those of the author(s) and not those of the funding organization(s) or of CEPR, which takes no

We are grateful to the Banco de España for their financial and organizational support. The views expressed in this paper are those of the author(s) and not those of the funding organization(s) or of CEPR, which takes no

We are grateful to the Banco de España for their financial and organizational support. The views expressed in this paper are those of the author(s) and not those of the funding organization(s) or of CEPR, which takes no

We are grateful to the following institutions for their financial and organizational support: European Central Bank The views expressed in this paper are those of the author(s) and not those of the funding organization(s) or of CEPR, which takes no

How does finance affect employment and inter-industry job reallocations? We present a model that predicts that financial development (i) raises employment and wages, its impact being smaller at high levels of the equilibrium wage and financial development; (ii) may induce either more or less job reallocations, depending on whether shocks to profit opportunities or to cash flow are more prevalent; (iii) at times of crisis, it amplifies the output and employment losses, with firms that rely more on banks for liquidity provision being hit the hardest. Upon testing these predictions on crosscountry industry level data for 1970-2003, we find that standard measures of financial development are indeed associated with greater employment growth, do so only in non-OECD countries, and are not correlated with greater real wage growth. Moreover, they correlate negatively with interindustry dispersion of employment growth. Finally, there is some evidence of a “dark side ” of financial development, in that in banking crisis it exacerbates employment losses.

We exploit time variation in the degree of development of local credit markets and matched employer-employee data to assess the role of the firm as an internal credit market. Relative to firms located in more developed credit markets, firms operating in less developed local credit markets can offer a flatter wage-tenure profile to lend implicitly to their workers or a steeper profile to implicitly borrow from them. We find that firms operating in less financially developed markets offer lower entry wages but faster wage growth than those offered by firms in more financially developed markets, helping firms finance their operations by raising funds from workers. Because we control for local market effects and only exploit time variation in the degree of local financial development induced by an exogenous liberalization, the effect we find is unlikely to reflect unobserved local factors that systematically affect wage tenure profiles. The reliance on implicit credit flows is more important for firms with more difficult access to bank credit and for workers less likely to face credit constraints. The amount of credit generated by implicit lending within the firm is economically important and can be as large as 30 % of bank lending. Consistent with credit market imperfections opening up trade opportunities within the

What is the short-run impact of media violence on crime? Laboratory experiments in psychology find that exposure to media violence increases aggression. In this paper, we provide field evidence on this question. We exploit variation in violence of blockbuster movies between 1995 and 2002, and study the effect on same-day assaults. We find that violent crime decreases on days with higher theater audiences for violent movies. The effect is mostly driven by incapacitation: between 6PM and 12AM, an increase of one million in the audience for violent movies reduces violent crime by 1.5 to 2 percent. After the exposure to the movie, between 12AM and 6AM, crime is still reduced but the effect is smaller and less robust. We obtain similar, but noisier, results using data on DVD and VHS rentals. Overall, we find no evidence of a temporary surge in violent crime due to exposure to movie violence. Rather, our estimates suggest that in the short-run violent movies deter over 200 assaults daily. We discuss the endogeneity of releases. Potential interpretations for our results include a cathartic effect of movies, displacement of crime, and decrease in alcohol consumption. The differences with the experimental results may