Job Displacement and Financial Outcomes

9 Pages Posted: 6 Jan 2019

See all articles by Daniel Aaronson

Daniel Aaronson

Federal Reserve Bank of Chicago

Sumit Agarwal

National University of Singapore

Julie L. Hotchkiss

Federal Reserve Bank of Atlanta; Georgia State University - Department of Economics

Taylor Kelley

Federal Reserve Bank of Chicago

Date Written: November 1, 2018

Abstract

Using two proprietary datasets on earnings and credit outcomes, this paper finds that both high- and low-earners take a significant and persistent hit to income after job displacement. But these losses only translate into worse credit conditions — higher credit card utilization, lower FICO scores, and a pick up in the rate of card accounts that are delinquent or over limit — among low-earners. We observe no negative implications among higher income households, providing novel empirical evidence of the economically disparate impact of job loss.

Keywords: displacement, credit constraints, administrative data, unemployment, mass layoff

JEL Classification: J65

Suggested Citation

Aaronson, Daniel and Agarwal, Sumit and Hotchkiss, Julie L. and Kelley, Taylor, Job Displacement and Financial Outcomes (November 1, 2018). Available at SSRN: https://ssrn.com/abstract=3305169 or http://dx.doi.org/10.2139/ssrn.3305169

Daniel Aaronson

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604-1413
United States

Sumit Agarwal

National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, 117592
Singapore
8118 9025 (Phone)

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

Julie L. Hotchkiss (Contact Author)

Federal Reserve Bank of Atlanta ( email )

Research Department
1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States
404-498-8198 (Phone)
404-498-8058 (Fax)

Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States

Taylor Kelley

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604
United States

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