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Positive Externalities of Social Insurance: Unemployment Insurance and Consumer Credit / Joanne W. Hsu, David A. Matsa, Brian T. Melzer.
- Format:
- Book
- Author/Creator:
- Hsu, Joanne W.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w20353.
- NBER working paper series no. w20353
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Positive Externalities of Social Insurance
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2014.
- Summary:
- This paper studies the impact of unemployment insurance (UI) on consumer credit markets. Exploiting heterogeneity in UI generosity across U.S. states and over time, we find that UI helps the unemployed avoid defaulting on their mortgage debt. We estimate that UI expansions during the Great Recession prevented about 1.4 million foreclosures. Lenders respond to this decline in default risk by expanding credit access and reducing interest rates for low-income households at risk of being laid off. Our findings call attention to two benefits of unemployment insurance not previously highlighted: reducing deadweight losses from loan default and expanding access to credit.
- Notes:
- Print version record
- July 2014.
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