%0 Report
        %A Dromel, Nicolas
%A Kolakez, Elie
%A Lehmann, Etienne
        %T Credit Constraints and the Persistence of Unemployment
        %D 2009
        %8 2009 Oct
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 4501
        %U https://www.iza.org/publications/dp4501
        %X 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.
        %K credit constraints
%K unemployment
%K labor markets
%K credit markets
%K search frictions