Measuring Valuation of Liquidity with Penalized Withdrawals

David Coyne, Itzik Fadlon and Tommaso Porzio

No 30007, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We use penalized withdrawals from retirement savings accounts as a revealed-preference tool to document three findings on American households' valuation of liquidity. First, local supply of credit explains over 30 percent of the nationwide differences in the valuation of liquidity across labor markets. Second, locations severely affected by the Great Recession displayed large increases in the valuation of liquidity, with spillovers in local credit tightening accounting for three-thirds of the effect. Third, Black households rely more on self-insurance from penalized withdrawals, consistent with lower access to formal credit markets. Overall, our findings imply sizable welfare gains from richer policy targeting.

JEL-codes: D14 D53 D61 E21 G51 H0 I38 J15 R1 (search for similar items in EconPapers)
Date: 2022-04
New Economics Papers: this item is included in nep-ias and nep-mac
Note: AG EFG PE
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.nber.org/papers/w30007.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:30007

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w30007

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().