Job Search under Debt: Aggregate Implications of Student Loans

• 成果类型: Article
• 署名作者: Ji, Yan
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2020.05.002
• 发表日期: 2021
• 关键词: student loan debt; search friction; reservation wage; risk and liquidity; income-based repayment plan

摘要

A dynamic equilibrium model of schooling, borrowing, and job search is developed to quantify the aggregate implications of student loans. In my model, risk-averse agents under debt tend to search less and end up with lower-paid jobs. Calibrating the model using micro data, I show that student loans have significant effects on borrowers' job search decisions under the fixed repayment plan. The income-based repayment plan (IBR) largely alleviates the burden of debt repayment by insuring labor market outcomes, allowing borrowers to conduct a more adequate job search. In general equilibrium, IBR also increases social welfare by encouraging college attendance. (C) 2020 Elsevier B.V. All rights reserved.