Financial system sophistication and unemployment in industrial countries

Reference:

Feldmann, H., 2013. Forthcoming. Financial system sophistication and unemployment in industrial countries. International Journal of Finance & Economics

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Official URL:

http://dx.doi.org/10.1002/ijfe.1466

Abstract

By using data on 21 industrial countries from 1984 to 2006 and a large number of controls, this paper studies the unemployment effects of one major characteristic of the financial system: its level of sophistication, that is, the variety of financial institutions and instruments available to the economy. The paper finds that a higher level of sophistication is likely to reduce unemployment among the total labour force as well as among high-skilled workers. The magnitude of both effects appears to be modest. By contrast, financial system sophistication does not appear to affect unemployment among low-skilled workers.

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