Financing Constraints and Unemployment: Evidence from the Great Recession

  title={Financing Constraints and Unemployment: Evidence from the Great Recession},
  author={Burcu Duygan-Bump and A. Levkov and Judit Montoriol-Garriga},
  journal={International Political Economy: Investment & Finance eJournal},
  • Burcu Duygan-Bump, A. Levkov, Judit Montoriol-Garriga
  • Published 2014
  • International Political Economy: Investment & Finance eJournal
  • 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… CONTINUE READING
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