Household Debt Overhang and Unemployment

• 成果类型: Article
• 署名作者: Donaldson, Jason Roderick; Piacentino, Giorgia; Thakor, Anjan
• 署名单位: Washington University (WUSTL); Centre for Economic Policy Research - UK; European Corporate Governance Institute
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12760
• 发表日期: 2019
• 页码: 1473-1502
• 关键词: Leverage; search; DESIGN; models; MARKET

摘要

We use a labor-search model to explain why the worst employment slumps often follow expansions of household debt. We find that households protected by limited liability suffer from a household-debt-overhang problem that leads them to require high wages to work. Firms respond by posting high wages but few vacancies. This vacancy posting effect implies that high household debt leads to high unemployment. Even though households borrow from banks via bilaterally optimal contracts, the equilibrium level of household debt is inefficiently high due to a household-debt externality. We analyze the role that a financial regulator can play in mitigating this externality.