Debt Relief and Debtor Outcomes: Measuring the Effects of Consumer Bankruptcy Protection
American Economic Review
vol. 105,
no. 3, March 2015
(pp. 1272-1311)
Abstract
Consumer bankruptcy is one of the largest social insurance programs in the United States, but little is known about its impact on debtors. We use 500,000 bankruptcy filings matched to administrative tax and foreclosure data to estimate the impact of Chapter 13 bankruptcy protection on subsequent outcomes. Exploiting the random assignment of bankruptcy filings to judges, we find that Chapter 13 protection increases annual earnings by $5,562, decreases five-year mortality by 1.2 percentage points, and decreases five-year foreclosure rates by 19.1 percentage points. These results come primarily from the deterioration of outcomes among dismissed filers, not gains by granted filers. (JEL D14, I12, J22, J31, K35)Citation
Dobbie, Will, and Jae Song. 2015. "Debt Relief and Debtor Outcomes: Measuring the Effects of Consumer Bankruptcy Protection." American Economic Review, 105 (3): 1272-1311. DOI: 10.1257/aer.20130612Additional Materials
JEL Classification
- D14 Household Saving; Personal Finance
- I12 Health Behavior
- J22 Time Allocation and Labor Supply
- J31 Wage Level and Structure; Wage Differentials
- K35 Personal Bankruptcy Law