Michał Zator
Michał Zator
Assistant Professor, Department of Finance, Mendoza College of Business
University of Notre Dame
Research Interests: Corporate and Household Finance, Labor Economics.
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Working Papers:
Working Papers:
Price Discovery in Labor Markets: Why Do Firms Say They Cannot Find Workers?, with Benjamin Friedrich
Conference Presentations: CSEF Conference on Finance, Labor, and Inequality 2024; NBER SI 2024 Personnel Economics, NBER Organizational Economics Meeting 2024, Utah Business Economics Conference 2025, Midwest Finance Association 2025, UNC/Duke Corporate Finance Conference 2025
Managers often report that labor constraints – defined as the inability to find workers – are a major obstacle to firms' growth. The phenomenon is puzzling, because economic theory offers a simple remedy: increase wages until the worker is found or hiring is no longer profitable. We explore why firms report labor constraints, instead of pre-empting them by increasing wages, using administrative data from Germany. We confirm that quasi-exogenous variation in labor constraints slows down firm growth. Wages play a role consistent with basic theory: firms that report constraints initially underpay their workers, increase wages later, and a quasi-exogenous increase in wages alleviates their problems. Why then do firms not increase wages earlier to avoid the problem to begin with? Unlike financial markets, labor markets do not have an easily observable price process. Firms set wages based on their beliefs, and when they underestimate market-clearing wages, labor constraints arise. Consistent with this mechanism, labor constraints increase after quasi-exogenous wage increases in other parts of the economy and are more prevalent in settings where firms are less well-informed.
Dual Credit Markets: Income Risk, Household Debt, and Consumption, ( Online Appendix ) with David Matsa and Brian Melzer; reject and resubmit at the Journal of Finance
Conference Presentations: UNC/Duke Corporate Finance Conference 2023, CSEF Conference on Finance, Labor, and Inequality 2023; Labor Finance Conference 2023, NBER SI 2023 Household Finance, Housing and Macroeconomy Chicago Area Conference, 2023 Credit and Payment Markets Philadelphia FED Conference, AFA 2025
Many young employees work on a temporary basis, which entails significantly greater income risk than “permanent” work, even for jobs in the same occupation and at a similar wage. We find that this income uncertainty leads lenders to ration credit to temporary workers, precisely at the stage of life when permanent workers rely on mortgages to invest in housing and loans to smooth consumption and purchase durable goods. Labor laws that improve job security for permanent workers create a dual credit market alongside the dual labor market, making it harder for young adults to establish financial independence and new families.
Bank Branch Density and Bank Runs, with Efraim Benmelech and Jun Yang; reject and resubmit at the Journal of Finance
Conference Presentations: SITE 2023, MFA 2024, CEPR Conference on Financial Stability and Regulation 2024, IESE Workshop on Banking Turmoil 2024, University of Connecticut 2024 Conference, Delaware FinTech and Financial Institutions Conference 2024, ESADE Spring Workshop 2024, WFA 2024, EFA 2024, Columbia SIPA Banking Forum 2025
Bank branch density, defined as the number of bank branches to total deposits, has significantly declined over the past decade, fueled by a confluence of branch closings and the almost doubling of deposits between 2016 and 2022. During this period, banks with low branch density benefited from large deposits inflows, leading to even lower density. But the virtuous cycle of deposits growth in these banks stopped spinning when investors became wary about their financial health. Stock prices of banks with low branch density plummeted during the 2023 Banking Crisis as these banks experienced larger outflows of uninsured deposits. Our results suggest that digital banking enabled banks to grow faster and attract uninsured deposits, but those large deposits inflows took the form of “hot money” that changed its course when economic conditions worsened.
Robots and Firm Investment, with Efraim Benmelech; conditionally accepted at Journal of Financial Economics
Conference Presentations: Labor Finance Online Seminar, NBER SI 2021 IT & Digitization, AFA 2022, MFA 2022, NFA 2022
Automation technologies, and robots in particular, are thought to be massively displacing workers and transforming the future of work. We study firm investment in automation using cross-country data on robotization as well as administrative data from Germany with information on firm-level automation decisions. Our findings suggest that the impact of robots on firms and labor markets has been limited. First, investment in robots is small and highly concentrated in a few industries, accounting for less than 0.30% of aggregate expenditures on equipment. Second, recent increases in robotization do not resemble the explosive growth observed for IT technologies in the past, and are driven mostly by catching-up of developing countries. Third, robot adoption by firms endogenously responds to labor scarcity, alleviating potential displacement of existing workers. Fourth, firms that invest in robots increase employment, while total employment effect in exposed industries and regions is negative, but modest in magnitude. We contrast robots with other digital technologies that are more widespread. Their importance in firms' investment is significantly higher, and their link with labor markets, while sharing some similarities with robots, appears markedly different.
(This paper combines and supersedes Zator (2019): "Digitization and Automation: Firm Investment and Labor Outcomes" (available here) and Benmelech and Zator (2019), "Where Are all the Robots?")
Publications:
Publications:
Working More to Pay the Mortgage: Household Debt, Interest Rates and Family Labor Supply; Journal of Finance 80(2) (2025)
I show that households work and earn more (less) when their floating-rate mortgage payments quasi-exogenously increase (decrease). The response is sizable and asymmetric: on average, households adjust their income by 35% of the change in the mortgage payment, but the response is significantly stronger following an increase in payments. While men in dual-earner, childless households respond the most on average, the asymmetry is most pronounced for women and young workers, who respond particularly strongly to payment increases. The asymmetry of the labor supply elasticity may help explain the wide range of elasticities found in previous research.
Poison Pills in the Shadow of the Law, with Martijn Cremers, Lubomir Litov, and Simone Sepe; forthcoming at the Journal of Financial and Quantitative Analysis
Poison pills are among the most powerful antitakeover defenses. Studying their economic impact is challenging because even firms without a “visible” pill have a “shadow” pill – i.e., the right to adopt a poison pill. We study the impact of “shadow pills” by exploiting U.S. states’ staggered adoption of poison pill laws (PPLs), which strengthened the “shadow pill.” We document that PPLs make visible pill policy more closely aligned with economic incentives, increasing pill adoption among low valuation firms but decreasing it among high-valuation firms. PPLs positively impact firm value, especially for innovative firms with more intangible assets.
Flexibility Costs of Debt: Danish Exporters During the Cartoon Crisis, with Benjamin Friedrich; Journal of Financial Economics 148(2) (2023)
We study how firms respond to an unexpected demand shock, exploiting the 2006 boycott of Danish products after publication of Muhammad caricatures. On average, affected firms lose the majority of their exports to Muslim countries and experience a significant decrease in total sales. Firms with low financial leverage fully offset the drop in sales by entering new markets and introducing new products, facilitating this expansion by higher investment and borrowing. In contrast, high-leverage firms do not substantially expand in other markets, and instead reduce employment. Our results highlight the importance of operational and financial flexibility, consistent with declarations of practitioners.
Morale and Debt Dynamics, with Daniel Barron and Jin Li; Management Science 68(6) (2022)
Financial obligations make it more difficult for firms to motivate their employees. Using administrative data, we document that a firm's financial leverage is negatively related to measures of employee morale, wages, and productivity. To explore these facts, we build a dynamic model of a wealth-constrained manager who simultaneously repays a creditor and motivates a worker. If the manager cannot commit to payments, then indebted managers are less willing to pay promised rewards, leading to low worker effort. Profit-maximizing equilibria are dynamic; effort and wages increase as outstanding debt decreases, although repaid debts can have lingering effects on effort.
A note on using the Hodrick–Prescott filter in electricity markets , with Rafał Weron, Energy Economics 48 (2015)
Revisiting the relationship between spot and futures prices in the Nord Pool electricity markets, with Rafał Weron, Energy Economics 44 (2014). Based on my Master's Thesis which can be accessed here.
Transaction costs and volatility on Warsaw Stock Exchange: implications for financial transaction tax, Bank i Kredyt 45 (2014). Based on my Bachelor's Thesis.
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