Real Effects of Financial Distress of Workers: Evidence from Teacher Spillovers

39 Pages Posted: 3 Aug 2016 Last revised: 25 May 2017

Gonzalo Maturana

Emory University - Goizueta Business School

Jordan Nickerson

Boston College

Date Written: May 25, 2017

Abstract

This paper studies the effects of financial distress on the productivity of workers. Using detailed data from the public school system in Texas, which allows us to exploit within-teacher variation and to control for a student's economic environment, we show that student performance decreases by 1.7% following a declaration of bankruptcy by their teacher. The effect of financial distress increases with the complexity of the task: Students designated as "at-risk" experience a 5.7% decrease in performance after their teacher files for bankruptcy. Our results indicate that the financial distress of workers can have important consequences for the economy.

Keywords: Bankruptcy, Labor, Worker Productivity, Education

JEL Classification: J01, I20, D10

Suggested Citation

Maturana, Gonzalo and Nickerson, Jordan, Real Effects of Financial Distress of Workers: Evidence from Teacher Spillovers (May 25, 2017). Available at SSRN: https://ssrn.com/abstract=2817470 or http://dx.doi.org/10.2139/ssrn.2817470

Gonzalo Maturana

Emory University - Goizueta Business School ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States

HOME PAGE: http://www.gonzalomaturana.com/

Jordan Nickerson (Contact Author)

Boston College ( email )

Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
United States

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