Firms' leverage and labour productivity: a quantile approach in Portuguese firms

We show that the leverage of Portuguese firms tends to negatively affect its tabour productivity for firms with relatively lower tabour productivity but to positively affect this variable for firms in the right-hand side of the productivity distribution. This is particularly important in a country where labour productivity is persistently lower compared with the richer countries in Europe. Thus, we have concluded that, controlling for the usual effects, increasing leverage cannot be a solution for the less productive (and consequently the majority) of Portuguese firms.