The Impact of Consumer Credit Access on Unemployment

Kyle Herkenhoff

The Review of Economic Studies, 2019, vol. 86, issue 6, 2605-2642

Abstract: Unemployed households’ access to unsecured revolving credit more than tripled over the last three decades. This article analyses how both cyclical fluctuations and trend increases in credit access impact the business cycle. The main quantitative result is that credit expansions and contractions have contributed to moderately deeper and more protracted recessions over the last 40 years. As more individuals obtained credit from 1977 to 2010, cyclical credit fluctuations affected a larger share of the population and became more important determinants of employment dynamics. Even though business cycles are more volatile, newborns strictly prefer to live in the economy with growing, but fluctuating, access to credit markets.

Keywords: Unemployment; Default; Search and matching; Business cycles (search for similar items in EconPapers)
JEL-codes: E21 E24 E3 G21 J6 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (30)

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Related works:
Working Paper: The Impact of Consumer Credit Access on Unemployment (2018)
Working Paper: The Impact of Consumer Credit Access on Unemployment (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:86:y:2019:i:6:p:2605-2642.

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