Bad Credit, No Problem? Credit and Labor Market Consequences of Bad Credit Reports

Will Dobbie, Paul Goldsmith‐pinkham, Neale Mahoney and Jae Song
Authors registered in the RePEc Author Service: Paul Goldsmith-Pinkham

Journal of Finance, 2020, vol. 75, issue 5, 2377-2419

Abstract: We study the financial and labor market impacts of bad credit reports. Using difference‐in‐differences variation from the staggered removal of bankruptcy flags, we show that bankruptcy flag removal leads to economically large increases in credit limits and borrowing. Using administrative tax records linked to personal bankruptcy records, we estimate economically small effects of flag removal on employment and earnings outcomes. We rationalize these contrasting results by showing that, conditional on basic observables, “hidden” bankruptcy flags are strongly correlated with adverse credit market outcomes but have no predictive power for measures of job performance.

Date: 2020
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Citations: View citations in EconPapers (28)

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https://doi.org/10.1111/jofi.12954

Related works:
Working Paper: Bad credit, no problem? Credit and labor market consequences of bad credit reports (2016)
Working Paper: Bad Credit, No Problem? Credit and Labor Market Consequences of Bad Credit Reports (2016)
Working Paper: Bad Credit, No Problem? Credit and Labor Market Consequences of Bad Credit Reports (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jfinan:v:75:y:2020:i:5:p:2377-2419

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