On credit frictions as labor–income taxation
AbstractThis paper suggests that a model in which firms face credit constraints on hiring labor can explain both the behavior of the labor wedge and the “jobless recoveries” phenomenon of the last three recessions. Using the corporate credit spread as a measure of firms’ credit conditions, I show that the “jobless recoveries” of the U.S. economy from the last three recessions were associated with slow declines in the spread following those recessions. The credit conditions of firms, thus, were important in shaping the labor market recoveries of the last two decades.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 118 (2013)
Issue (Month): 2 ()
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Jobless recoveries; Labor wedge; Credit spread; Credit frictions; Labor-income taxation;
Find related papers by JEL classification:
- E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
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