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Borrowing during unemployment: unsecured debt as a safety net
Over the past two decades, U.S. consumers have increasingly relied on unsecured debt to finance consumption. The growth in unsecured debt has been particularly striking for low-income households. Some researchers have suggested that poor households use this debt to smooth consumption intertemporally, implying that these credit markets effectively serve as a safety net for disadvantaged households. This paper examines whether unsecured credit markets do, in fact, play an important role in the ability of disadvantaged households to supplement unemployment-induced earnings losses. I use panel ...