Credit Constraints and the Persistence of Unemployment
Copyright policy )Credit Constraints and the Persistence of Unemployment
In this paper, we argue that credit market imperfections impact not only the level of unemployment, but also its persistence. For this purpose, we first develop a theoretical model based on the equilibrium matching framework of Mortensen and Pissarides (1999) and Pissarides (2000) where we introduce credit constraints. We show these credit constraints not only increase steady-state unemployment, but also slow down the transitional dynamics. We then provide an empirical illustration based on a country panel dataset of 20 OECD countries. Our results suggest that credit market imperfections significantly increase the persistence of unemployment. (C) 2010 Elsevier B.V. All rights reserved.
JEL: J - Labor and Demographic Economics/J.J0 - General/J.J0.J08 - Labor Economics Policies, labor markets, unemployment, 330, Arbeitsuche, Credit markets, Arbeitslosigkeit, credit constraints, J08, credit markets, labor markets, unemployment, credit constraints, search frictions, OECD-Staaten, labour markets, Verschuldungsrestriktion, [SHS.ECO] Humanities and Social Sciences/Economics and Finance, search frictions, Theorie der Arbeitslosigkeit, Vacancies, and Immigrant Workers/J.J6.J64 - Unemployment: Models, JEL: E - Macroeconomics and Monetary Economics/E.E4 - Money and Interest Rates/E.E4.E44 - Financial Markets and the Macroeconomy, Saving, ddc:330, Incidence, Hysteresis, Production, Labor Markets, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, JEL: J - Labor and Demographic Economics/J.J6 - Mobility, search frictions,Credit markets,labor markets,unemployment,credit constraints,search frictions.,Marché du crédit,marché du travail,chômage,contrainte de crédit,frictions d'appariement., Duration, E44, and Informal Economy/E.E2.E24 - Employment • Unemployment • Wages • Intergenerational Income Distribution • Aggregate Human Capital • Aggregate Labor Productivity, E24, Investment, J64, JEL: E - Macroeconomics and Monetary Economics/E.E2 - Consumption, and Job Search, Schätzung, jel: jel:E44, jel: jel:J64, jel: jel:E24, jel: jel:J08
JEL: J - Labor and Demographic Economics/J.J0 - General/J.J0.J08 - Labor Economics Policies, labor markets, unemployment, 330, Arbeitsuche, Credit markets, Arbeitslosigkeit, credit constraints, J08, credit markets, labor markets, unemployment, credit constraints, search frictions, OECD-Staaten, labour markets, Verschuldungsrestriktion, [SHS.ECO] Humanities and Social Sciences/Economics and Finance, search frictions, Theorie der Arbeitslosigkeit, Vacancies, and Immigrant Workers/J.J6.J64 - Unemployment: Models, JEL: E - Macroeconomics and Monetary Economics/E.E4 - Money and Interest Rates/E.E4.E44 - Financial Markets and the Macroeconomy, Saving, ddc:330, Incidence, Hysteresis, Production, Labor Markets, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, JEL: J - Labor and Demographic Economics/J.J6 - Mobility, search frictions,Credit markets,labor markets,unemployment,credit constraints,search frictions.,Marché du crédit,marché du travail,chômage,contrainte de crédit,frictions d'appariement., Duration, E44, and Informal Economy/E.E2.E24 - Employment • Unemployment • Wages • Intergenerational Income Distribution • Aggregate Human Capital • Aggregate Labor Productivity, E24, Investment, J64, JEL: E - Macroeconomics and Monetary Economics/E.E2 - Consumption, and Job Search, Schätzung, jel: jel:E44, jel: jel:J64, jel: jel:E24, jel: jel:J08
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