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Effects of debt exposure on self-employment: Evidence from US local markets in the Great Recession

Author

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  • Unel, Bulent

Abstract

A significant increase in household debt occurred in the United States before the Great Recession. This study examines variations in debt-to-income ratios across local areas at the onset of the recession to understand how exposure to debt affected unincorporated self-employment and its average income during and after the downturn. It shows that the adverse effects of the recession on self-employment outcomes were more pronounced in areas that experienced larger household debt shocks. Furthermore, analysis of the following years indicates that the impact on self-employment persisted for a few more years after the recession ended.

Suggested Citation

  • Unel, Bulent, 2026. "Effects of debt exposure on self-employment: Evidence from US local markets in the Great Recession," Journal of Economic Behavior & Organization, Elsevier, vol. 248(C).
    • Handle: RePEc:eee:jeborg:v:248:y:2026:i:c:s0167268126002258
    DOI: 10.1016/j.jebo.2026.107639
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    Keywords

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    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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