IDEAS home Printed from https://ideas.repec.org/p/cdl/econwp/qt9bn4w75j.html
   My bibliography  Save this paper

Greater Inequality and Household Borrowing: New Evidence from Household Data

Author

Listed:
  • Coibion, Olivier
  • Gorodnichenko, Yuriy
  • Kudlyak, Marianna
  • Mondragon, John

Abstract

Using household-level debt data over 2000-2012 and local variation in inequality, we show that low-income households in high-inequality regions (zip codes, counties, states) accumulated less debt relative to their income than low-income households in lower inequality regions. We also find evidence that low-income households face higher credit prices and reduced access to credit as inequality increases. We argue that these patterns are consistent with inequality tilting credit supply away from low-income households and toward high-income households, which may have long-run implications for outcomes like homeownership or entrepreneurship.

Suggested Citation

  • Coibion, Olivier & Gorodnichenko, Yuriy & Kudlyak, Marianna & Mondragon, John, 2020. "Greater Inequality and Household Borrowing: New Evidence from Household Data," Department of Economics, Working Paper Series qt9bn4w75j, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    • Handle: RePEc:cdl:econwp:qt9bn4w75j
    as

    Download full text from publisher

    File URL: https://www.escholarship.org/uc/item/9bn4w75j.pdf;origin=repeccitec
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kim Nguyen, 2022. "Do Australian Households Borrow to Keep up with the Joneses?," RBA Research Discussion Papers rdp2022-06, Reserve Bank of Australia.
    2. Alina K. Bartscher & Moritz Kuhn & Moritz Schularick & Ulrike I. Steins, 2020. "Modigliani Meets Minsky: Inequality, Debt, and Financial Fragility in America, 1950-2016," Staff Reports 924, Federal Reserve Bank of New York.
    3. Bing Han & David Hirshleifer & Johan Walden, 2023. "Visibility Bias in the Transmission of Consumption Beliefs and Undersaving," Journal of Finance, American Finance Association, vol. 78(3), pages 1647-1704, June.
    4. S. Boragan Aruoba & Ronel Elul & Sebnem Kalemli Ozcan, 2022. "Housing Wealth and Consumption: The Role of Heterogeneous Credit Constraints," Working Papers 22-34, Federal Reserve Bank of Philadelphia.
    5. Brausewetter, Lars & Ludolph, Melina & Tonzer, Lena, 2023. "Distributional income effects of banking regulation in Europe," IWH Discussion Papers 24/2023, Halle Institute for Economic Research (IWH).
    6. Samuel Ligonnière & Salima Ouerk, 2024. "The unequal distribution of credit: Is there any role for monetary policy?," Working Papers of BETA 2024-19, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    7. Cantarella, Michele & Kavonius, Ilja Kristian, 2022. "Job polarisation and household borrowing," Working Paper Series 2683, European Central Bank.
    8. Domonkos, Tomas & Fisera, Boris & Siranova, Maria, 2023. "Income inequality as long-term conditioning factor of monetary transmission to bank rates," Economic Modelling, Elsevier, vol. 128(C).
    9. Doerr, Sebastian & Drechsel, Thomas & Lee, Donggyu, 2022. "Income Inequality and Job Creation," CEPR Discussion Papers 17342, C.E.P.R. Discussion Papers.
    10. Anna Samarina & Anh D.M. Nguyen, 2024. "Does Monetary Policy Affect Income Inequality in the Euro Area?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 56(1), pages 35-80, February.
    11. Magnus A. H. Gulbrandsen, 2021. "Peer effects and debt accumulation: Evidence from lottery winnings," Working Paper 2021/10, Norges Bank.
    12. Jean‐Noël Barrot & Erik Loualiche & Matthew Plosser & Julien Sauvagnat, 2022. "Import Competition and Household Debt," Journal of Finance, American Finance Association, vol. 77(6), pages 3037-3091, December.
    13. Alina K. Bartscher & Moritz Kuhn & Moritz Schularick & Ulrike I. Steins, 2020. "The Distribution of Household Debt in the United States, 1950-2019," ECONtribute Discussion Papers Series 015, University of Bonn and University of Cologne, Germany.
    14. Joshua Brault & Hashmat Khan, 2021. "Indebted Demand in a Two Period Consumption-Saving Model," Carleton Economic Papers 21-13, Carleton University, Department of Economics, revised 05 Jan 2022.
    15. Wang, Shengquan, 2023. "Income inequality and systemic banking crises: A nonlinear nexus," Economic Systems, Elsevier, vol. 47(4).
    16. Sebastian Doerr & Thomas Drechsel & Donggyu Lee, 2021. "Income inequality, financial intermediation, and small firms," BIS Working Papers 944, Bank for International Settlements.
    17. Marrero,Gustavo Alberto & Rodríguez,Juan Gabriel & Van Der Weide,Roy, 2021. "Does Race and Gender Inequality Impact Income Growth ?," Policy Research Working Paper Series 9865, The World Bank.

    More about this item

    Keywords

    Clinical Research; Reduced Inequalities; Economics;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cdl:econwp:qt9bn4w75j. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lisa Schiff (email available below). General contact details of provider: https://edirc.repec.org/data/ibbrkus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.