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Unemployment and financial development: evidence for OECD countries

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  • António Afonso
  • M. Carmen Blanco-Arana

Abstract

It has been argued that credit market frictions may contribute to high unemployment. Hence, we assess the relationship between financial development and the labor market in OECD countries during the period 1990–2020. Using a random effects model for a panel dataset, we conclude that an increase in market capitalization and in the volume of shares traded can significantly reduce the unemployment rate. Likewise, inflation and per capita GDP growth are found to have significantly affected the evolution of the unemployment rate during the period under study.

Suggested Citation

  • António Afonso & M. Carmen Blanco-Arana, 2021. "Unemployment and financial development: evidence for OECD countries," Working Papers REM 2021/0204, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    • Handle: RePEc:ise:remwps:wp02042021
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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