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Government Subsidies and Household Debt Burden After the Great Recession

Author

Listed:
  • Kyoung Tae Kim

    (University of Alabama)

  • Melissa J. Wilmarth

    (University of Alabama)

Abstract

During the recent Great Recession, US households, especially those with low incomes, faced severe financial distress. Households experiencing economic hardship may turn to receiving government assistance to alleviate the hardship or distress. Receiving government assistance may improve a household’s financial situation as it could be decreasing its reliance on debt or even improving a household’s ability to repay their current debt. We investigated how households’ financial debt obligations were affected by receiving government assistance, as has not been previously analyzed. Given the focus of this research, we included households under 185 % of poverty threshold released by the 2012 US Census Bureau. Results from the 2010 and 2013 Survey of Consumer Finances indicate that government assistance was positively related to the odds of meeting debt-to-income ratio guidelines, implying that government assistance plays an important role in financial security of low-income households. This study provides important insights for researchers and policymakers in the areas of poverty and household finance.

Suggested Citation

  • Kyoung Tae Kim & Melissa J. Wilmarth, 2016. "Government Subsidies and Household Debt Burden After the Great Recession," Journal of Family and Economic Issues, Springer, vol. 37(3), pages 349-358, September.
    • Handle: RePEc:kap:jfamec:v:37:y:2016:i:3:d:10.1007_s10834-016-9492-5
    DOI: 10.1007/s10834-016-9492-5
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    References listed on IDEAS

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    Cited by:

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    2. Terri Friedline & Zibei Chen & So’Phelia Morrow, 2021. "Families’ Financial Stress & Well-Being: The Importance of the Economy and Economic Environments," Journal of Family and Economic Issues, Springer, vol. 42(1), pages 34-51, July.
    3. Cesar Leandro, Julio & Botelho, Delane, 2022. "Consumer over-indebtedness: A review and future research agenda," Journal of Business Research, Elsevier, vol. 145(C), pages 535-551.
    4. Radion Svynarenko & Qun Zhang & Hyungsoo Kim, 2019. "The Financial Burden of Cancer: Financial Ratio Analysis," Journal of Family and Economic Issues, Springer, vol. 40(2), pages 165-179, June.
    5. Nurul Syifaa Mohd Shakil & Nur Azirah Zahida Mohamad Azhar & Norashida Othman & Ahmad Zuhairi Zainuddin & Lucky Rachmawati & Tony Seno Aji & Hendry Cahyono, 2023. "Nexus between Government Assistance and Savings: Preliminary Analysis of Households in Malaysia," Information Management and Business Review, AMH International, vol. 15(3), pages 462-469.

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    More about this item

    Keywords

    Poverty; Government subsidies; Household debt; Survey of consumer finances;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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