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UID:380c708cfcf56589ee739148f3284185
CATEGORIES:Seminars
CREATED:20150210T181712
SUMMARY:Virgiliu Midrigan - New York University
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:Debt Constraints and Employment\nAbstract:\nIn the Great Contraction, regio
 ns of the United States that experienced the largest change in household de
 bt to income ratios also experienced the largest drops in output and employ
 ment. These patterns are difficult to reconcile with standard models of fin
 ancial frictions. We develop a model with search and matching frictions wit
 h on-the-job human capital accumulation that generates such patterns. We ca
 librate the amount of on-the-job human capital accumulation so that the mod
 el reproduces the wage-tenure profiles in the data. We show that with such 
 upward sloping wage profiles, an unanticipated tightening of borrowing cons
 traints leads consumers to discount more the returns to human capital accum
 ulation. Consequently, the match surplus falls and so does the equilibrium 
 number of vacancies firms post. Our key result is that the tightening of co
 nsumer borrowing constraints generates a persistent drop in employment and 
 seemingly `sticky’ wages, despite wages being continually negotiated.\n
DTSTAMP:20260405T145011Z
DTSTART:20140529T173000Z
DTEND:20140529T190000Z
SEQUENCE:0
TRANSP:OPAQUE
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