Financial Access and Labor Market Outcomes: Evidence from Credit Lotteries

41 Pages Posted: 9 Mar 2021

See all articles by Bernardus Ferdinandus Nazar Van Doornik

Bernardus Ferdinandus Nazar Van Doornik

Government of the Federative Republic of Brazil - Central Bank of Brazil

Armando R. Gomes

Washington University in Saint Louis - John M. Olin Business School

David Schoenherr

Princeton University, Bendheim Center for Finance; European Corporate Governance Institute (ECGI)

Janis Skrastins

Washington University in St. Louis

Date Written: March 8, 2021

Abstract

We assess the employment and income effects of access to credit dedicated to investment in individual mobility (a motorcycle). For identification, we exploit random time-series variation in access to credit through random lotteries for participants in a group-lending mechanism in Brazil. We find that access to credit for investment in individual mobility permanently increases formal employment rates and salaries, yielding an annual real rate of return of 16.94 percent over a ten-year horizon. Consistent with a geographically broader job search, we find that individuals transition to jobs further away from home and public transportation. Our results suggest that credit constraints prevent individuals from accessing parts of the labor market. As a consequence, extending credit for investment in mobility enables individuals to access geographically distant labor market opportunities, yielding high and persistent returns.

Keywords: access to credit, household finance, labor mobility, spatial mismatch

JEL Classification: D14, G23, J62, R20, R23

Suggested Citation

Doornik, Bernardus Ferdinandus Nazar Van and Gomes, Armando R. and Schoenherr, David and Skrastins, Janis, Financial Access and Labor Market Outcomes: Evidence from Credit Lotteries (March 8, 2021). Available at SSRN: https://ssrn.com/abstract=3800020 or http://dx.doi.org/10.2139/ssrn.3800020

Bernardus Ferdinandus Nazar Van Doornik

Government of the Federative Republic of Brazil - Central Bank of Brazil ( email )

P.O. Box 08670
SBS Quadra 3 Bloco B - Edificio-Sede
Brasilia, Distr. Federal 70074-900
Brazil

Armando R. Gomes

Washington University in Saint Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
3145607087 (Phone)

David Schoenherr

Princeton University, Bendheim Center for Finance ( email )

26 Prospect Avenue
Princeton, NJ 08540
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Janis Skrastins (Contact Author)

Washington University in St. Louis ( email )

1 brookings drive
campus box 1133
st louis, MO St Louis 63130
United States

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

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