Aversion to Student Debt? Evidence from Low-Wage Workers

• 成果类型: Article
• 署名作者: Gopalan, Radhakrishnan; Hamilton, Barton H.; Sabat, Jorge; Sovich, David
• 署名单位: Washington University (WUSTL); University Diego Portales; University of Kentucky; University of Kentucky
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.13297
• 发表日期: 2024
• 页码: 1249-1295
• 关键词: minimum-wage; CREDIT EXPANSIONS; EMPLOYMENT; income; consumption; shocks

摘要

We combine state minimum wage changes with individual-level income and credit data to estimate the effect of wage gains on the debt of low-wage workers. In the three years following a $0.88 minimum wage increase, low-wage workers experience a $2,712 income increase and a $856 decrease in debt. The entire decline in debt comes from less student loan borrowing among enrolled college students. Credit constraints, buffer-stock behavior, and other rational channels cannot explain the reduction in student debt. Our results are consistent with students perceiving a utility cost of borrowing student debt arising from mental accounting.