NATIONAL BUREAU OF ECONOMIC RESEARCH
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The Impact of Consumer Credit Access on Unemployment

Kyle F. Herkenhoff

NBER Working Paper No. 25187
Issued in October 2018
NBER Program(s):Labor Studies

Unemployed households' access to unsecured revolving credit more than tripled over the last three decades. This paper analyzes 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.

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Document Object Identifier (DOI): 10.3386/w25187

Published: Kyle F Herkenhoff, 2019. "The Impact of Consumer Credit Access on Unemployment," The Review of Economic Studies, vol 86(6), pages 2605-2642.

 
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