Access to Credit and Employment Liquidation. Firm‐Level Evidence From Eastern and Central Europe (2001–2007)

ABSTRACT This article investigates the changes in the structure of employment in Central and Eastern European firms between 2001 and 2007, before the Global Financial Crisis and following the reforms in the labour and credit markets in these economies. By linking firms' workforce restructuring to their access to credit, this article interrogates well‐accepted theorisations of employment changes including those focusing on labour flexibility. From a policy perspective, these findings question the sole reliance on labour market flexibility as employment policy and advocate for a tighter coordination of labour and credit interventions to limit the negative impact on the quality of jobs of firms' credit needs.