The Impact of Consumer Credit Access on Unemployment

Working Paper No. 25187 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 expan...

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Bibliographic Details
Published in:NBER Working Paper Series 2018-10, p.25187
Format: Article
Language:English
Subjects:
Economic models
Economic theory
Employment
Households
Revolving credit
Volatility
Online Access:Get full text
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Summary:Working Paper No. 25187 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.
ISSN:0898-2937
DOI:10.3386/w25187