The Labor Market Effects of Credit Market Information

52 Pages Posted: 3 Sep 2015 Last revised: 22 Jul 2017

See all articles by Marieke Bos

Marieke Bos

Swedish House of Finance - Stockholm School of Economics; Vrije Universiteit Amsterdam; Consumer Finance Institute, Federal Reserve Bank of Philadelphia; Tinbergen Institute

Emily Breza

Columbia University - Columbia Business School, Finance; Columbia University - Columbia Business School, Finance

Andres Liberman

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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

Bos, Marieke and Breza, Emily 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

Marieke Bos

Swedish House of Finance - Stockholm School of Economics ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

HOME PAGE: http://www.mariekebos.org

Vrije Universiteit Amsterdam ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

Consumer Finance Institute, Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Emily Breza

Columbia University - Columbia Business School, Finance ( email )

3022 Broadway
New York, NY 10027
United States

Columbia University - Columbia Business School, Finance ( email )

3022 Broadway
New York, NY 10027
United States

Andres Liberman (Contact Author)

Betterfly ( email )

Santiago
Chile

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