On Intergenerational Immobility: Evidence that Adult Credit Health Reflects the Childhood Environment
22 Pages Posted: 14 May 2020
Date Written: April 2020
We examine the persistence of inequality through credit health, linking administrative records from several sources. We document that childhood circumstances are strongly predictive of financial fragility in adulthood, with credit scores among those from disadvantaged backgrounds nearly 100 points lower and 20 percentage points more likely to qualify as subprime. We find evidence this relationship reflects differences in human capital and debt management; still, neither appears to fully explain the relationship. Our results reveal another dimension along which childhood circumstances persist into adulthood and could mean the many settings that evaluate individuals based on their credit health help reinforce inequities.
JEL Classification: D12, E24, I32
Suggested Citation: Suggested Citation