The Effect of Household Debt Deleveraging on Unemployment Evidence from Spanish Provinces
AbstractThe Spanish economy is currently plagued by a deep recession with very high unemployment. We ask how much of the unemployment increase in Spain can be traced back to the debt deleveraging needs of Spanish households. We use provincial household debt and sectoral unemployment data and follow Mian and Sufi (2012) to isolate the effect of household debt on Spanish unemployment. We find that the level of household sector debt in Spanish provinces in 2007 is a highly significant determinant of the subsequent increase in provincial unemployment from 2007 to 2010. Our estimates indicate that approximately 1/3 of the increase in overall Spanish unemployment over that period can be traced back to high household debt levels. --
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Bibliographic InfoPaper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order with number 79853.
Date of creation: 2013
Date of revision:
Find related papers by JEL classification:
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
- O52 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Europe
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- Mishkin, Frederic S., 1978. "The Household Balance Sheet and the Great Depression," The Journal of Economic History, Cambridge University Press, vol. 38(04), pages 918-937, December.
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- Steve Keen, 2009. "Household Debt: The Final Stage in an Artificially Extended Ponzi Bubble," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(3), pages 347-357.
- Gauti B. Eggertsson & Paul Krugman, 2012. "Debt, Deleveraging, and the Liquidity Trap: A Fisher-Minsky-Koo Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 127(3), pages 1469-1513.
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