Full Citation

Title: Debt Constraints and Employment

Citation Type: Miscellaneous

Publication Year: 2017

ISBN:

ISSN:

DOI: 10.1086/701608

NSFID:

PMCID:

PMID:

Abstract: During the Great Recession, U.S. regions that experienced large declines in household debt also experienced large drops in consumption, employment, and wages. We develop a search and matching model in which tighter debt constraints raise the cost of investing in new job vacancies and so reduce job-finding rates and employment. On-the-job human capital accumulation is critical to generating sizable drops in employment: it increases the duration of the benefit flows from posting vacancies, thereby amplifying the employment drop from a credit tightening tenfold relative to the standard model. Our model reproduces the salient cross-regional features of the U.S. Great Recession.

Url: http://www.virgiliumidrigan.com/uploads/1/3/9/8/13982648/18_wtablesfigures.pdf

User Submitted?: No

Authors: Kehoe, Patrick J; Midrigan, Virgiliu; Pastorino, Elena

Publisher: Stanford University

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure, Other

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