Debt Relief for the Financially Vulnerable: Impact on Employment, Welfare Receipt, and Mental Health

Ernst-Jan de Bruijn (), Heike Vethaak (), Pierre Koning and Marike Knoef ()
Additional contact information
Ernst-Jan de Bruijn: Leiden University
Heike Vethaak: University of Leiden
Marike Knoef: Tilburg University

No 16336, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We study the labor market and mental health impacts of debt relief among financially vulnerable individuals. We exploit a cutoff rule used by a Dutch welfare office to determine eligibility to debt relief of welfare debts. We use this cutoff as an instrument in both a fuzzy regression discontinuity and instrumented difference-in-difference design. With administrative data, we estimate economically small and insignificant effects of debt relief on employment, earnings, welfare receipt, and medication use for mental health problems. Subgroup analyses suggest that debt relief increases employment among debtors with larger welfare debts. The larger amount of debt relief for this group has probably a stronger potential to improve their overall debt position.

Keywords: debt relief; welfare debts; welfare recipients; fuzzy regression discontinuity design; instrumented difference-in-difference (search for similar items in EconPapers)
JEL-codes: G51 I38 J22 J64 J68 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2023-07
New Economics Papers: this item is included in nep-eur, nep-hea and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://docs.iza.org/dp16336.pdf (application/pdf)

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:iza:izadps:dp16336

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().