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Author: Hamilton, Barton H.
Resulting in 1 citation.
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Gopalan, Radhakrishnan Hamilton, Barton H. Sabat, Jorge Sovich, David |
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Aversion to Student Debt? Evidence from Low-Wage Workers Journal of Finance published online (08 December 2023). Also: https://onlinelibrary.wiley.com/doi/10.1111/jofi.13297 Cohort(s): NLSY97 Publisher: Wiley Online Keyword(s): Credit/Credit Constraint; Debt, Student; Debt/Borrowing; Income; Minimum Wage; Student Loans / Student Aid Permission to reprint the abstract has not been received from the publisher. 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. |
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Bibliography Citation
Gopalan, Radhakrishnan, Barton H. Hamilton, Jorge Sabat and David Sovich. "Aversion to Student Debt? Evidence from Low-Wage Workers." Journal of Finance published online (08 December 2023).
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