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Effects of U.S. Banking Deregulation on Unemployment Dynamics

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  • Unel, Bulent

Abstract

I use state-level banking deregulation in the U.S. to study the causal impact of credit expansion on unemployment through its effects on the average monthly job-finding and job-losing rates. State-level analysis shows that deregulation increased the average job-finding rate and decreased the job-losing rate, and thus led to a lower unemployment rate. I also find that deregulation decreased the average unemployment duration. Extending the analysis to industry-state level, I find that the impact of deregulation on the job-finding rate is positive, but does not show any pattern across industries with respect to their needs for external finance. However, deregulation reduced the average job-losing rate, and the reduction monotonically increases with industries’ dependence on external finance.

Suggested Citation

  • Unel, Bulent, 2020. "Effects of U.S. Banking Deregulation on Unemployment Dynamics," Journal of Macroeconomics, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:jmacro:v:65:y:2020:i:c:s0164070420301634
    DOI: 10.1016/j.jmacro.2020.103237
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    More about this item

    Keywords

    Banking Deregulation; Job-Finding Rate; Job-Losing Rate; External Financial Dependence; Unemployment;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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