Labor Market Effects of Deleting Delinquencies

45 Pages Posted: 17 Nov 2020

See all articles by Gonzalo Maturana

Gonzalo Maturana

Emory University - Goizueta Business School

Jordan Nickerson

MIT - Sloan

Santiago Truffa

ESE Business School; affiliation not provided to SSRN

Date Written: September 29, 2020

Abstract

We develop a simple model to examine the implications of prohibiting the use of credit histories in hiring practices. We empirically test the model using a recent law implemented in Chile. This law extended periods of unemployment for low-income workers, consistent with the pooling equilibrium in the market for talent predicted by our model. Moreover, these effects are particularly large for younger workers and female workers. While laws that ban credit checks for hiring purposes continue to gain traction, our paper highlights that these laws may not benefit all low-income workers and may instead lead to cross-subsidization within this group.

Keywords: unemployment, hiring, credit reports, information

JEL Classification: J01, J60, M51, D80

Suggested Citation

Maturana, Gonzalo and Nickerson, Jordan and Truffa, Santiago, Labor Market Effects of Deleting Delinquencies (September 29, 2020). Available at SSRN: https://ssrn.com/abstract=3701820 or http://dx.doi.org/10.2139/ssrn.3701820

Gonzalo Maturana (Contact Author)

Emory University - Goizueta Business School ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States

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

Jordan Nickerson

MIT - Sloan ( email )

100 Main Street
Cambridge, MA 02142
United States

Santiago Truffa

ESE Business School ( email )

Av. La Plaza 1905
San Carlos de Apoquindo, Las Condes
Santiago
Chile

affiliation not provided to SSRN

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