The Labor Market Effects of Credit Market Information
52 Pages
Posted: 3 Sep 2015
Last revised: 22 Jul 2017
Swedish House of Finance - Stockholm School of Economics
Columbia Business School - Finance and Economics
New York University (NYU) - Department of Finance
There are 2 versions of this paper
Date Written: April 1, 2017
Abstract
We exploit a natural experiment to measure the causal effect of negative credit information on the employment and earnings of Swedish individuals at the margins of formal credit and labor markets. We estimate that one additional year of negative credit information reduces employment by 3% and wage earnings by $1,000. In comparison, the decrease in credit is only one-fourth as large. Negative credit information also causes an increase in self-employment and a decrease in mobility. Further evidence suggests this cost of default is borne inefficiently by the relatively more creditworthy individuals among previous defaulters.
Suggested Citation:
Suggested Citation
Bos, Marieke and Breza, Emily and Liberman, Andres, The Labor Market Effects of Credit Market Information (April 1, 2017). Swedish House of Finance Research Paper No. 15-13; Columbia Business School Research Paper No. 15-80. Available at SSRN: https://ssrn.com/abstract=2654489 or http://dx.doi.org/10.2139/ssrn.2654489
