Real effects of workers’ financial distress: Evidence from teacher spillovers

Gonzalo Maturana and Jordan Nickerson

Journal of Financial Economics, 2020, vol. 136, issue 1, 137-151

Abstract: This paper studies the effects of financial distress on workers’ productivity, using detailed data from the public school system in Texas. We show that the student passing rate in the median-sized grade decreases by 1.2 percentage points following a declaration of bankruptcy by one teacher in the grade. The effect of financial distress increases with the complexity of the task. Overall, our results suggest a potential feedback effect of worker financial distress on local economic conditions and thus contribute to the understanding of the propagation, and potential amplification, of shocks through a local economy.

Keywords: Bankruptcy; Labor productivity; Economic shocks; Feedback effects; Education (search for similar items in EconPapers)
JEL-codes: G33 I20 J01 J24 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:136:y:2020:i:1:p:137-151

DOI: 10.1016/j.jfineco.2019.09.001

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