The DOI matches its Crossref record; 1 of the 1 references it cites were found in a registry or an index.
Household Debt Overhang and Unemployment
Open accessAbstract
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.
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The Distributional Effects of Student Loan Forgiveness
Catherine, S., & Yannelis, C. (2023) · Journal of Financial Economics · doi:10.1016/j.jfineco.2022.10.003 · Cited by 48
Metadata
- Authors
- DONALDSON, J. R., PIACENTINO, G., & THAKOR, A.
- Affiliations
- Center for Economic and Policy Research (US)
- ORCID
- THAKOR, ANJAN
- Venue
- The Journal of Finance
- Publisher
- Wiley
- Published
- 2019-03-18
- Volume
- 74
- Issue
- 3
- Pages
- 1473-1502
- ISSN
- 0022-1082 (ISSN-L)
- 1540-6261
- OpenAlex
- W2912759916
- Cited by
- 74
- References
- 1
- Citations by year
- 2026: 6 · 2025: 9 · 2024: 17 · 2023: 12 · 2022: 5 · 2021: 9 · 2020: 10 · 2019: 3
- FWCI
- 8.43
- Type
- journal article
- Language
- en
- Open access
- green
- doi.org
- Locations
- The Journal of Finance (publishedVersion)
- SSRN Electronic Journal (publishedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic theories and models
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Economic Theory and Policy
- Social Sciences › Economics, Econometrics and Finance › Finance › Banking stability, regulation, efficiency
- Keywords
- unemployment, limited liability, labor search model, wage determination, job vacancies, financial regulation, household borrowing
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- CoChat. (2026). Citation check: Household Debt Overhang and Unemployment. https://app.cochat.ai/papers/10.1111/jofi.12760
- The paper
- DONALDSON, J. R., PIACENTINO, G., & THAKOR, A. (2019). Household Debt Overhang and Unemployment. The Journal of Finance. https://doi.org/10.1111/jofi.12760
