Resolving Insolvency - Labour-Market Consequences of Personal Debt Restructuring

Wolter Hassink (), Lotte Muller, Frans Dijk and Frank Tulder
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Wolter Hassink: Utrecht University and IZA, Utrecht University School of Economics
Lotte Muller: VU Amsterdam, The Institute for Environmental Studies
Frans Dijk: Utrecht University
Frank Tulder: Netherlands Council for the Judiciary

De Economist, 2025, vol. 173, issue 2, No 4, 367-384

Abstract: Abstract The paper investigates whether the Dutch Act on debt restructuring natural persons (WSNP) has an effect on the labour market outcomes of severely indebted persons. When participating in the programme, the indebted persons must be prepared to perform paid work activities, even though the income they may earn is below the social assistance benefit. If they fail the criteria of the programme, the debtors face bankruptcy. If they are successful, personal debts will be forgiven after a maximum of five years of wage garnishments. Our estimates indicate strong labour market effects of the debtors after applying for the WSNP.

Keywords: Labour supply; Financial debts; Debt restructuring; Wage garnishments; D31; H24; J22; J31; K35 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10645-025-09454-w

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