Can the Unemployed Borrow? Implications for Public Insurance

• 成果类型: Article
• 署名作者: Braxton, J. Carter; Herkenhoff, Kyle; Phillips, Gordon M.
• 署名单位: University of Wisconsin System; University of Wisconsin Madison; Federal Reserve System - USA; Federal Reserve Bank - Minneapolis; University of Minnesota System; University of Minnesota Twin Cities; National Bureau of Economic Research; Dartmouth College
• 刊物名称: JOURNAL OF POLITICAL ECONOMY
• ISSN/ISSBN: 0022-3808
• DOI: 10.1086/729583
• 发表日期: 2024
• 页码: 3025-3076
• 关键词: UNSECURED DEBT; Credit limits; job search; bankruptcy; CONSEQUENCES; liquidity; duration; savings; MODEL

摘要

We empirically establish that unemployed individuals maintain significant access to credit and that upon a layoff, the unconstrained borrow while the constrained default and delever. Motivated by these findings, we develop a theory of credit lines and labor income risk to analyze optimal transfers to the unemployed. Since credit lines offer fixed interest rates and limits, credit lines are unresponsive to layoffs and provide greater consumption insurance relative to when debt is repriced period by period. At US levels of credit lines, the government can optimally reduce transfers to the unemployed, whereas this is not true when debt is counterfactually repriced period by period.