In this paper, we examine whether imperfections in credit markets spill over to other markets,particularly the labor market. We take the case of Italy, a country that experienced changes inthe mortgage market brought about by the 1992 European unification and other institutionalshifts. These events make Italy a good laboratory to study the effects of financial markets onthe labor market. Using a simultaneous equation framework and household data from theBank of Italy between 1989 and 1993, we estimate the relationship between femaleparticipation and mortgage use. We find a significant impact of mortgages on women’sparticipation in the labor market.