No. 1058 - Zombie firms and the growth of the living: the labor market channel

Questioni di Economia e Finanza (Occasional papers)
by Antonio Accetturo, Michele Cascarano and Andrea Locatelli
September 2026
Vai alla versione italiana Site Search

This study assesses the impact of the presence of firms in a state of persistent financial distress (so-called 'zombie firms') on the growth of financially healthy companies. Specifically, it analyzes the employment response of healthy firms to changes in foreign demand as a function of the share of the local labor force employed by zombie firms operating within the same local labor markets.

The presence of zombie firms dampens employment growth, particularly for managers and white-collar workers. The impact is more pronounced among smaller firms, which typically rely more heavily on their local labor market for recruitment and have fewer resources to attract human capital. The effect is driven by zombie firms that remain in a state of financial distress for prolonged periods without formally entering insolvency or bankruptcy procedures.

Full text

  1. 17 September 2026
    No. 1058 - Zombie firms and the growth of the living: the labor market channel
    PDF 3 MB

Sezione di approfondimento