Greater Inequality and Household Borrowing: New Evidence from Household Data. Issue 6 (6th January 2020)

• Record Type: Journal Article
• Authors: Coibion, Olivier; Gorodnichenko, Yuriy; Kudlyak, Marianna; Mondragon, John
• Is Part Of: Journal of the European Economic Association. Volume 18:Issue 6(2020)
• Page Start: 2922
• Page End: 2971
• Publication Date: 2020-01-06
• Subjects: Economics -- Periodicals; Économie politique -- Périodiques; Science économique; Périodique électronique (Descripteur de forme); Ressource Internet (Descripteur de forme); 330
• DOI: 10.1093/jeea/jvz076
• Languages: English
• ISSNs: 1542-4766

Abstract

Abstract: Using household-level debt data over 2000–2012 and local variation in inequality, we show that low-income households in high-inequality regions (zip codes, counties, states) accumulated less debt relative to their income than low-income households in lower inequality regions. We also find evidence that low-income households face higher credit prices and reduced access to credit as inequality increases. We argue that these patterns are consistent with inequality tilting credit supply away from low-income households and toward high-income households, which may have long-run implications for outcomes like homeownership or entrepreneurship.