Journal Article
Effects of Credit Supply on Unemployment and Income Inequality
Dinopoulos , Elias; Unel, Bulent; Bandyopadhyay, Subhayu (2018)
The Great Recession, which was preceded by the Financial Crisis, resulted in higher unemployment and income inequality. We propose a simple model where firms producing varieties face labor-market frictions and credit constraints. In the model, tighter credit leads to lower output, a lower number of vacancies, and higher directed-search unemployment. If workers are more productive at higher levels of firm output, then a lower credit supply increases firm capital intensity, raises income inequality by increasing the rental of capital relative to the wage, and has an ambiguous effect on welfare. ...
Review , Volume 100 , Issue 4 , Pages 345-362

Working Paper
Effects of Credit Supply on Unemployment and Inequality
Bandyopadhyay, Subhayu; Dinopoulos , Elias; Unel, Bulent (2016-06-15)
The Great Recession, which was preceded by the financial crisis, resulted in higher unemployment and inequality. We propose a simple model where firms producing varieties face labor-market frictions and credit constraints. In the model, tighter credit leads to lower output, lower number of vacancies, and higher directed-search unemployment. Where workers are more productive at higher levels of firm output, lower credit supply increases firm capital intensity, raises inequality by increasing the rental of capital relative to the wage, and has an ambiguous effect on welfare. At initial high ...
Working Papers , Paper 2016-13