Robert Bednarzik, Andreas Kern and John Hisnanick
This paper aims to analyze the question of how household indebtedness impacts households’ incentives to search for and accept work after displacement.
Abstract
Purpose
This paper aims to analyze the question of how household indebtedness impacts households’ incentives to search for and accept work after displacement.
Design/methodology/approach
To analyze the relationship between household indebtedness and unemployment duration, this paper applies standard proportional hazard models. For data, this paper relies on the longitudinal US National Survey of Income and Program Participation (SIPP), covering the period between 2008 and 2012.
Findings
The findings show that a 10% increase in household debt increases the likelihood (hazard) of leaving unemployment by 0.2%–0.4% points. Independent of measuring a household's indebtedness and in light of a series of robustness tests, the results indicate that the pressure of servicing an existing debt burden forces individuals to return to work.
Social implications
From a policy perspective, the research findings support the notion that household indebtedness plays an important mediating role for labor market outcomes through influencing households’ incentives to return to work after displacement. This finding has important implications for the design of effective policy responses to mass layoffs during the current pandemic.
Originality/value
A key innovation of the research is that we can show that household indebtedness impacts the labor supply side. From a macroeconomic perspective, this insight is important in better understanding the role of increased indebtedness (and financialization) in amplifying aggregate macroeconomic dynamics.
Details
Keywords
Hospitals adjusted their admitting practices and treatment protocols in response to the prospective payment system (PPS) enacted by the Health Care Financing Agency over a decade…
Abstract
Hospitals adjusted their admitting practices and treatment protocols in response to the prospective payment system (PPS) enacted by the Health Care Financing Agency over a decade ago. Under PPS it is often not profitable for a hospital to admit and treat chronically ill individuals, with Medicare coverage, who may require extended periods of in‐patient care. It has been suggested in the literature that hospitals engage in “patient dumping”, or shifting high‐cost Medicare patients to public hospitals, to minimize loses. Institutional factors and market deficiencies result in discriminatory practices towards poor, elderly and disabled patients with limited or no health insurance coverage in the provision of health care. US Department of Veteran Affairs medical centers, however, provide an alternative, or safety net, for poor, elderly and disabled veterans who would be prime Medicare candidates for patient dumping.
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Keywords
This study aims to gain insight into the motivations behind the decision to use high-cost payday loans by households who possess mainstream credit and to determine whether this…
Abstract
Purpose
This study aims to gain insight into the motivations behind the decision to use high-cost payday loans by households who possess mainstream credit and to determine whether this behavior has changed over time.
Design/methodology/approach
Using data from Statistics Canada’s Surveys of Financial Security, probit models are used to examine the sociodemographic and financial indicators associated with payday loan use.
Findings
The analysis uncovers the sociodemographic and financial characteristics of payday loan-user households with access to lower-cost short-term loans. The findings indicate that the likelihood of payday loan use has risen over time. Additional analysis reveals that indicators of financial instability are positively associated with payday loan use among this group.
Research limitations/implications
This research highlights the dichotomy of payday loan users and recommends policymakers tailor solutions to the specific needs of different types of payday loan users.
Practical implications
This research highlights the distinguishing sociodemographic and financial characteristics of payday loan user households and recommends policymakers tailor solutions to the specific needs of different types of payday loan users.
Originality/value
This is the first study, to our knowledge, to focus analysis on payday loan use of those with access to lower-cost short-term credit alternatives in Canada and to include measures of financial instability in the analysis. This research is timely given the current economic environment of high interest rates and high levels of household debt.