Greater Inequality and Household Borrowing: New Evidence from Household Data

Olivier Coibion, Yuriy Gorodnichenko, Marianna Kudlyak and John Mondragon

Journal of the European Economic Association, 2020, vol. 18, issue 6, 2922-2971

Abstract: Using household-level debt data over 2000–2012 and local variation in inequality, we show that low-income households in high-inequality regions (zip codes, counties, states) accumulated less debt relative to their income than low-income households in lower inequality regions. We also find evidence that low-income households face higher credit prices and reduced access to credit as inequality increases. We argue that these patterns are consistent with inequality tilting credit supply away from low-income households and toward high-income households, which may have long-run implications for outcomes like homeownership or entrepreneurship.

Date: 2020
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Working Paper: Greater Inequality and Household Borrowing: New Evidence from Household Data (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:jeurec:v:18:y:2020:i:6:p:2922-2971.

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