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

43 Pages Posted: 3 Aug 2016 Last revised: 2 Nov 2018

See all articles by Gonzalo Maturana

Gonzalo Maturana

Emory University - Goizueta Business School

Jordan Nickerson

Boston College

Date Written: October 31, 2018

Abstract

This paper studies the effects of financial distress on workers' productivity. We use detailed data from the public school system in Texas, which allow us to exploit within-teacher variation and to control for a student's economic environment. We show that student performance decreases by 6.5% following a declaration of bankruptcy by the student's teacher. The effect of financial distress increases with the complexity of the task. Overall, our results suggest a potential feedback effect of worker financial distress on local economic conditions and thus contribute to the understanding of the propagation, and potential amplification, of shocks through a local economy.

Keywords: bankruptcy, labor productivity, economic shocks, feedback effects, education

JEL Classification: J01, J24, G33, I20

Suggested Citation

Maturana, Gonzalo and Nickerson, Jordan, Real Effects of Workers' Financial Distress: Evidence from Teacher Spillovers (October 31, 2018). 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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