Financing constraints and unemployment: evidence from the Great Recession

Burcu Duygan-Bump, Alexey Levkov and Judit Montoriol-Garriga
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Burcu Duygan-Bump: https://www.federalreserve.gov/econres/burcu-duygan-bump.htm
Authors registered in the RePEc Author Service: Judit Montoriol Garriga ()

No QAU10-6, Supervisory Research and Analysis Working Papers from Federal Reserve Bank of Boston

Abstract: This paper exploits the differential financing needs across industrial sectors and provides strong empirical evidence that financing constraints of small businesses are important in explaining the unemployment dynamics around the Great Recession. In particular, we show that workers in small firms are more likely to become unemployed during the 2007-2009 financial crisis if they work in industries with high external financing needs. According to our estimates, eliminating financial constraints of small firms could add up to 850,000 jobs to the economy. We suggest that policies aimed at making credit available to small businesses would significantly help stabilize the labor markets and economic activity in the U.S.

Keywords: Unemployment; small business finance; Recessions; Financial crises - United States (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-ent and nep-lab
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Citations: View citations in EconPapers (26)

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Related works:
Journal Article: Financing constraints and unemployment: Evidence from the Great Recession (2015)
Working Paper: Financing Constraints and Unemployment: Evidence from the Great Recession (2014)
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