Does paycheck frequency matter? Evidence from micro data

Brian Baugh and Filipe Correia

Journal of Financial Economics, 2022, vol. 143, issue 3, 1026-1042

Abstract: Using a unique dataset from an account aggregator, we analyze cross-sectional differences and within-household time-series variation in paycheck frequency. We find that higher paycheck frequency results in less credit card borrowing, less consumption, but more instances of financial distress — even when the change in paycheck frequency is employer-initiated. We find that pay frequency strongly determines within-month time patterns of financial distress. Our theoretical model reconciles these empirical results — higher paycheck frequency increases consumers’ willingness to allocate to illiquid savings vehicles, leading to a reduction in both consumption and within-paycycle borrowing.

Keywords: Paycheck frequency; Labor income; Household debt; Financial distress (search for similar items in EconPapers)
JEL-codes: D14 D15 G21 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304405X21005080
Full text for ScienceDirect subscribers only

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:eee:jfinec:v:143:y:2022:i:3:p:1026-1042

DOI: 10.1016/j.jfineco.2021.12.002

Access Statistics for this article

Journal of Financial Economics is currently edited by G. William Schwert

More articles in Journal of Financial Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().