We find that investor sentiment should affect a firm's employment policy in a world with moral hazard and noise traders …. Consistent with the model's predictions, we show that higher sentiment among US investors leads to: (1) higher employment growth … worldwide; (2) lower labor productivity, as the growth in employment is not matched by real value added growth; and (3) positive …

credit. We find that, for employment, household access to bank loans matters more than firm access to bank loans. In addition …, consumer installment loans may have contributed significantly to the drop in employment in the manufacturing sector …