Financing Constraints and Unemployment: Evidence from the Great Recession

Burcu Duygan-Bump, Alexey Leykov 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 2014-92, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Exploiting the differential financing needs across industrial sectors, this paper shows that financing constraints of small businesses in the United States are one of the drivers explaining the unemployment dynamics during the Great Recession. We show that workers in small firms are more likely to become unemployed during the 2007-09 financial crisis if they work in industries with high external financing needs. We find very similar results for the 1990-91 recession, but not for the 2001 recession, where only the former was associated with a reduction in loan supply. These findings further support the credit constraints hypothesis.

Keywords: Great Recession; firm size; financial dependence; unemployment (search for similar items in EconPapers)
JEL-codes: E24 E44 G20 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2014-10-22
New Economics Papers: this item is included in nep-bec and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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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 (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2014-92

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