Impact of the great rise in finance on resource allocation and employment

Project Summary:

The authors will investigate how large increases in household debt affect the allocation of labor across geographical areas and industries. This project is a continuation of their previous research on household debt, and will result in the creation of a new historical county-level panel of household balance sheets and industry-specific employment—a harmonized data set (1946-2012) that will be available to other researchers. A second contribution is a test of whether the run-up in debt led to imbalances in employment, a corollary to the findings in Mian and Sufi (2014) about employment shocks during the Great Recession. A better understanding of the interaction between household debt and structural changes in the allocation of labor could help researchers better identify and understand the root causes behind the labor market slowdown.


Atif Mian is the Theodore A. Wells ’29 Professor of Economics and Public Affairs at Princeton University, and Director of the Julis-Rabinowitz Center for Public Policy and Finance at the Woodrow Wilson School. He holds a bachelor’s degree in mathematics with computer science and a Ph.D. in economics from the Massachusetts Institute of Technology. Prior to joining Princeton in 2012, he taught at the University of California, Berkeley and the University of Chicago Booth School of Business.

Mian’s work studies the connections between finance and the macroeconomy. His latest book, “House of Debt” with Amir Sufi, builds upon powerful new data to describe how debt precipitated the Great Recession. The book explains why debt continues to threaten the global economy, and what needs to be done to fix the financial system. “House of Debt” is critically acclaimed by The New York Times, Financial Times, The Wall Street JournalThe Economist, and The Atlantic among others. Professor Mian’s research has appeared in top academic journals, including the American Economic Review, Econometrica, Quarterly Journal of EconomicsJournal of FinanceReview of Financial Studies, and Journal of Financial Economics.

Selected Publications