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The Labor Market Effects of Credit Market Information

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

Marieke Bos

Swedish House of Finance - Stockholm School of Economics

Emily Breza

Columbia Business School - Finance and Economics

Andres Liberman

New York University (NYU) - Department of Finance

Multiple version iconThere 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

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

Marieke Bos

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

Drottninggatan 98
111 60 Stockholm
Sweden

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

Emily Breza

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

Andres Liberman (Contact Author)

New York University (NYU) - Department of Finance ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States

HOME PAGE: http://pages.stern.nyu.edu/~aliberma/

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