Debtdriven recessions result in prolonged unemployment from "summary" of House of Debt by Atif Mian,Amir Sufi
The central idea here is that when a recession is driven by high levels of debt, the resulting unemployment tends to be more severe and prolonged. This is because when households and businesses are heavily in debt, they are more likely to cut back on spending in order to pay off their debts. This decrease in spending leads to a decrease in demand for goods and services, which in turn leads to layoffs and job losses. As more people lose their jobs, they are unable to keep up with their debt payments, which can lead to defaults and bankruptcies. This further exacerbates the economic downturn, as lenders become more wary of extending credit and businesses struggle to stay afloat. The cycle of debt-driven recession and prolonged unemployment continues as businesses are unable to hire new workers and consumers are unable to spend as freely. One key aspect o...
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