Credit Access and Mobility during the Flint Water Crisis

28 Pages Posted: 17 Feb 2021

See all articles by Maxim Pinkovskiy

Maxim Pinkovskiy

Federal Reserve Bank of New York

Nicole Gorton

Federal Reserve Banks - Federal Reserve Bank of New York

Date Written: February 2021

Abstract

How do credit-constrained communities cope with the financial consequences of environmental crises? Beginning in April 2014, the residents of Flint, Michigan, were exposed to lead-contaminated water resulting from a series of governmental missteps. In this paper, we use the spatial distribution of lead and galvanized pipes in Flint to study the effect of the crisis on households’ financial health, including loan balances, repayment of outstanding debt, and Equifax Risk Scores, as well as on household mobility. We find that relatively more affected households, as measured by exposure to lead pipes, experienced a modest increase in the balance and frequency of past due loans. Equifax Risk Scores declined slightly on average, but more so at the bottom of the Risk Score distribution. In addition, we find that there was no effect on mobility out of the state or county, but that more affected households were more likely to move within the city when the crisis began, away from lead-pipe-dense areas.

Keywords: consumer finance, mobility, natural disaster

JEL Classification: G51, H84, R20

Suggested Citation

Pinkovskiy, Maxim and Gorton, Nicole, Credit Access and Mobility during the Flint Water Crisis (February 2021). FRB of New York Staff Report No. 960, Available at SSRN: https://ssrn.com/abstract=3787685 or http://dx.doi.org/10.2139/ssrn.3787685

Maxim Pinkovskiy (Contact Author)

Federal Reserve Bank of New York ( email )

Nicole Gorton

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

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