The Impact of Consumer Credit Access on Employment, Earnings and Entrepreneurship
AbstractHow does consumer credit access impact job
ows, earnings, and entrepreneurship?
To answer this question, we build a new administrative dataset which links individ-
ual employment and entrepreneur tax records to TransUnion credit reports, and we
exploit the discrete increase in consumer credit access following bankruptcy
ag removal, individuals
ow into self-employment. New entrants earn
more, borrow signicantly using unsecured and secured consumer credit, and are more
likely to become an employer business. In addition, after
ag removal, non-employed
and self-employed individuals are more likely to nd unemployment-insured \formal"
jobs at larger rms that pay greater wages. These estimates imply that rms believe
previously bankrupt workers are 3.8% less productive than non-bankrupt workers, on
average. These results suggest that consumer credit access matters for each stage of
entrepreneurship and that credit-checks may be limiting formal sector employment