Credit Constraints and the Persistence of Unemployment

Nicolas Dromel, Elie Kolakez () and Etienne Lehmann ()
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Elie Kolakez: ERMES - Equipe de recherche sur les marches, l'emploi et la simulation - UP2 - Université Panthéon-Assas - CNRS - Centre National de la Recherche Scientifique

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

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 19 OECD countries. Our results suggest that credit market imperfections would significantly increase the persistence of unemployment.

Keywords: Credit markets; labor markets; unemployment; credit constraints; search frictions.; search frictions; Marché du crédit; marché du travail; chômage; contrainte de crédit; frictions d'appariement. (search for similar items in EconPapers)
Date: 2009-05
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00389762v1
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Published in 2009

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Related works:
Journal Article: Credit constraints and the persistence of unemployment (2010)
Working Paper: Credit Constraints and the Persistence of Unemployment (2010)
Working Paper: Credit Constraints and the Persistence of Unemployment (2010)
Working Paper: Credit Constraints and the Persistence of Unemployment (2010)
Working Paper: Credit Constraints and the Persistence of Unemployment (2009)
Working Paper: Credit Constraints and the Persistence of Unemployment (2009)
Working Paper: Credit constraints and persistence of unemployment (2009)
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