Borrowing During Unemployment: Unsecured Debt as a Safety Net
AbstractThis paper examines whether unsecured credit markets help disadvantaged households supplement temporary shortfalls in earnings by investigating how unsecured debt responds to unemployment-induced earnings losses. Results indicate that very low-asset households—those in the bottom decile of total assets—do not borrow in response to these shortfalls. However, other low-asset households do borrow, increasing unsecured debt by more than 11 cents per dollar of earnings lost. In contrast, wealthy households do not increase unsecured debt during unemployment. The evidence suggests that very low-asset households do not have sufficient access to unsecured credit to smooth consumption over transitory unemployment spells.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by University of Wisconsin Press in its journal Journal of Human Resources.
Volume (Year): 43 (2008)
Issue (Month): 2 ()
Contact details of provider:
Web page: http://jhr.uwpress.org/
Other versions of this item:
- James X. Sullivan, 2005. "Borrowing during unemployment: unsecured debt as a safety net," Proceedings 958, Federal Reserve Bank of Chicago.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Peter Debbaut & Andra C. Ghent & Marianna Kudlyak, 2013. "Are young borrowers bad borrowers? Evidence from the Credit CARD Act of 2009," Working Paper 13-09, Federal Reserve Bank of Richmond.
- Thomas Crossley & Hamish Low, 2005.
"Borrowing constraints, the cost of precautionary saving and unemployment insurance,"
IFS Working Papers
W05/02, Institute for Fiscal Studies.
- Thomas Crossley & Hamish Low, 2011. "Borrowing constraints, the cost of precautionary saving and unemployment insurance," International Tax and Public Finance, Springer, vol. 18(6), pages 658-687, December.
- Thomas F. Crossley & Hamish W. Low, 2004. "Borrowing Constraints, the Cost of Precautionary Saving, and Unemployment Insurance," Quantitative Studies in Economics and Population Research Reports 391, McMaster University.
- Thomas F. Crossley & Hamish W. Low, 2005. "Borrowing Constraints, the Cost of Precautionary Saving, and Unemployment Insurance," Social and Economic Dimensions of an Aging Population Research Papers 125, McMaster University.
- Xavier Ragot & Edouard Challe, 2011.
"Precautionary Saving over the Business Cycle,"
2011 Meeting Papers
517, Society for Economic Dynamics.
- Athreya, Kartik & Tam, Xuan S. & Young, Eric R., 2009. "Unsecured credit markets are not insurance markets," Journal of Monetary Economics, Elsevier, vol. 56(1), pages 83-103, January.
- Hyytinen, Ari & Putkuri, Hanna, 2012. "Household optimism and borrowing," Research Discussion Papers 21/2012, Bank of Finland.
- Ivan Vidangos, 2009. "Household welfare, precautionary saving, and social insurance under multiple sources of risk," Finance and Economics Discussion Series 2009-14, Board of Governors of the Federal Reserve System (U.S.).
- Ron Borzekowski & Elizabeth K. Kiser & Shaista Ahmed, 2006.
"Consumers' use of debit cards: patterns, preferences, and price response,"
Finance and Economics Discussion Series
2006-16, Board of Governors of the Federal Reserve System (U.S.).
- Ron Borzekowski & K. Kiser Elizabeth & Ahmed Shaista, 2008. "Consumers' Use of Debit Cards: Patterns, Preferences, and Price Response," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(1), pages 149-172, 02.
- James X. Sullivan, 2005.
"Welfare Reform, Saving, and Vehicle Ownership: Do Asset Limits and Vehicle Exemptions Matter?,"
Upjohn Working Papers and Journal Articles
05-117, W.E. Upjohn Institute for Employment Research.
- James X. Sullivan, 2006. "Welfare Reform, Saving, and Vehicle Ownership: Do Asset Limits and Vehicle Exemptions Matter?," Journal of Human Resources, University of Wisconsin Press, vol. 41(1).
- Raj Chetty, 2005. "Why do Unemployment Benefits Raise Unemployment Durations? Moral Hazard vs. Liquidity," NBER Working Papers 11760, National Bureau of Economic Research, Inc.
- Bauer, Christian, 2011. "On the reservation wage under CARA and limited borrowing," Mathematical Social Sciences, Elsevier, vol. 62(2), pages 126-129, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.