Greater Inequality and Household Borrowing: New Evidence from Household Data

Olivier Coibion, Yuriy Gorodnichenko, Marianna Kudlyak and John Mondragon

Department of Economics, Working Paper Series from Department of Economics, Institute for Business and Economic Research, UC Berkeley

Abstract: Using household-level debt data over 2000-2012 and local variation in inequality, we show that low-income households in high-inequality regions (zip codes, counties, states) accumulated less debt relative to their income than low-income households in lower inequality regions. We also find evidence that low-income households face higher credit prices and reduced access to credit as inequality increases. We argue that these patterns are consistent with inequality tilting credit supply away from low-income households and toward high-income households, which may have long-run implications for outcomes like homeownership or entrepreneurship.

Keywords: Clinical Research; Reduced Inequalities; Economics (search for similar items in EconPapers)
Date: 2020-12-16
New Economics Papers: this item is included in nep-cwa
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Citations: View citations in EconPapers (24)

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Journal Article: Greater Inequality and Household Borrowing: New Evidence from Household Data (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:cdl:econwp:qt9bn4w75j

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