Mian and Sufi (who showed that cash for clunkers failed) have written a batch of papers on leverage and the financial crisis. This one may be my favorite: They check to see whether counties with the highest leverage before the crisis (measured by the ratio of household debt to income) lost the most retail and restaurant jobs. Key quote:
[A] one standard deviation increase in the 2006 debt to income ratio of a county is associated with a 3 percentage point drop in [retail and restaurant] employment during this [2007-2009] time period...
So high-borrowing counties were high-layoff counties.
But there's more to it than that: High-leverage counties lost a lot of retail and restaurant jobs (which they label "non-tradable"), but they didn't lose an especially high number of jobs making tradable goods. So the worsening balance sheets hurt the demand for local goods, but didn't noticeably hurt the supply of exported goods. Each dot is a county: And don't forget this:
[W]e show that the leverage ratio of a county is a far more powerful predictor of total employment losses than either the growth in construction employment during the housing boom or the construction share of the labor force as of 2007.