Episodes of Banking Crises and UnemploymentEconomists Carmen Reinhart and Kenneth Rogoff have compared employment performance across several countries in the aftermath of a number of severe banking crises. For each country, the bar on the left shows the rise in the unemployment rate during and following the crisis, and the bar on the right shows how long it took for unemployment to begin to fall. On average, severe banking crises have been followed by a 7 percentage point rise in the unemployment rate, and in many cases it has taken four years or more before unemployment even begins to fall, let alone returns to precrisis levels.
Source: Carmen M. Reinhart and Kenneth S. Rogoff, “The Aftermath of Financial Crises,”
American Economic Review 99, no. 2 (2009): 46
6–472.