Replication Data for: "Labor Market Effects of Credit Constraints: Evidence from a Natural Experiment."

Principal Investigator(s): View help for Principal Investigator(s) Anil Kumar, Federal Reserve Bank of Dallas; Che-Yuan Liang, Uppsala University

Version: View help for Version V1

Name	File Type	Size	Last Modified
data			11/19/2023 02:24:AM
programs			11/19/2023 02:25:AM
results			11/19/2023 02:26:AM
Dataset sources and details_v2.xlsx	application/vnd.openxmlformats-officedocument.spreadsheetml.sheet	20.2 KB	11/18/2023 09:10:PM
readme.pdf	application/pdf	294.3 KB	11/18/2023 09:10:PM

Project Description

Summary: We exploit the 1997 and 2003 constitutional amendments in Texas—allowing home equity loans and lines of credit for non-housing purposes—as natural experiments to estimate the effect of easier credit access on the labor market. Using state-level as well as micro data and the synthetic control approach, we find that easier access to housing credit led to a 1.2 percentage point average decline in the labor force participation rate between 1997 and 2007. We show that our findings are remarkably robust to improved synthetic control methods based on insights from machine-learning. We also find that declines in the labor force participation rate were larger among females, prime age individuals, the college-educated, and homeowners. Our research shows that negative labor market effects of easier credit access should be an important factor when assessing its stimulative impact on overall growth.

Scope of Project

Subject Terms: Credit Constraints; Labor Supply; Synthetic Control; Machine Learning; Treatment Effect

JEL Classification:
      E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
      E65 Studies of Particular Policy Episodes
      J21 Labor Force and Employment, Size, and Structure
      R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics

Geographic Coverage: USA

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Published Versions

V1 [2024-07-29]

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