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Author Dromel, Nicolas ♦ Kolakez, Elie ♦ Lehmann, Etienne
Source EconStor
Content type Text
Publisher Institute for the Study of Labor (IZA)
File Format PDF
Language English
Subject Domain (in DDC) Social sciences ♦ Economics
Subject Keyword Credit markets ♦ labor markets ♦ unemployment ♦ credit constraints ♦ search frictions ♦ Arbeitslosigkeit ♦ Hysteresis ♦ Verschuldungsrestriktion ♦ Theorie der Arbeitslosigkeit ♦ Arbeitsuche ♦ Schätzung ♦ OECD-Staaten ♦ Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ♦ Financial Markets and the Macroeconomy ♦ Labor Economics Policies ♦ Unemployment: Models, Duration, Incidence, and Job Search
Abstract 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.
Part of series IZA Discussion Papers x4501
Learning Resource Type Article
Publisher Date 2009-01-01
Publisher Place Bonn
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