The Long-Run Effects of Individual Debt Relief

Gustaf Bruze, Alexander Kjær Hilsløv and Jonas Maibom ()
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Alexander Kjær Hilsløv: Aarhus University
Jonas Maibom: Aarhus University

No 17047, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Individuals with extensive debt may be granted debt relief in court. We provide a comprehensive evaluation of the Danish debt relief program with data from court records linked to nationwide register data. Using event-study methods and quasi-random assignment of applicants to court trustees with varying admission rates, we show that debt relief leads to a large increase in earned income, employment, assets, real estate, secured debt, home ownership, and wealth that persists for more than 25 years after a court ruling. The net transition of workers into employment accounts for two thirds of the increase in earned income.

Keywords: household finance; personal bankruptcy; debt relief (search for similar items in EconPapers)
JEL-codes: D14 D31 K35 (search for similar items in EconPapers)
Pages: 100 pages
Date: 2024-06
New Economics Papers: this item is included in nep-ban and nep-ure
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Published - published online in: Review of Economics and Statistics , 29 October 2024

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Working Paper: The Long-Run Effects of Individual Debt Relief (2024)
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