Poverty Levels and Debt Indicators Among Low-Income Households Before and After the Great Recession

43 Pages Posted: 17 Oct 2017 Last revised: 4 Nov 2017

See all articles by Kyoung Tae Kim

Kyoung Tae Kim

University of Alabama

Melissa Wilmarth

University of Alabama - Department of Consumer Sciences

Robin Henager

Whitworth University

Date Written: November 2, 2017

Abstract

This study analyzed the debt profile of low-income households before and after the Great Recession using the 2007-2013 Survey of Consumer Finances. We utilized Heckman selection models to investigate three debt characteristics; (1) the amount of debt, (2) debt-to-income ratio, and (3) debt delinquency. Before and after the Great Recession, results from the selection stage showed the probability of holding debt for households increased as their income level increased (moving into less severe poverty categories); results from the outcome stage indicated households in the most severe poverty category (below 100% of poverty threshold) were less likely to meet debt-to-income ratio guidelines. Following the Great Recession these lowest-income households were more likely to have higher debt and debt delinquency problems.

Keywords: debt profile, Great Recession, low-income households, poverty, Survey of Consumer Finances

JEL Classification: D12, D14

Suggested Citation

Kim, Kyoung Tae and Wilmarth, Melissa and Henager, Robin, Poverty Levels and Debt Indicators Among Low-Income Households Before and After the Great Recession (November 2, 2017). Journal of Financial Counseling and Planning, 28(2), 196-212, 2017. Available at SSRN: https://ssrn.com/abstract=3009900

Kyoung Tae Kim (Contact Author)

University of Alabama ( email )

312 Adams Hall
Tuscaloosa, AL 35487-0001
United States

Melissa Wilmarth

University of Alabama - Department of Consumer Sciences ( email )

Tuscaloosa, AL 35487-0158
United States

Robin Henager

Whitworth University ( email )

Spokane, WA
United States

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