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http://hdl.handle.net/10419/36120
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| Title: | | Credit constraints and the persistence of unemployment  |
| Authors: | | Dromel, Nicolas Kolakez, Elie Lehmann, Etienne |
| Issue Date: | | 2009 |
| Series/Report no.: | | IZA Discussion Papers 4501 |
| 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. |
| Subjects: | | Credit markets labor markets unemployment credit constraints search frictions |
| JEL: | | E24 E44 J08 J64 |
| Persistent Identifier of the first edition: | | urn:nbn:de:101:1-20091104951 |
| Document Type: | | Working Paper |
| Appears in Collections: | | IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)
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