IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_11159.html
   My bibliography  Save this paper

The Long-Run Effects of Individual Debt Relief

Author

Listed:
  • Gustaf Bruze
  • Alexander Kjær Hilsløv
  • Jonas Maibom

Abstract

Individuals with extensive debt may be granted debt relief in court. We provide a comprehensive evaluation of the Danish debt relief program with data from court records linked to nationwide register data. Using event-study methods and quasi-random assignment of applicants to court trustees with varying admission rates, we show that debt relief leads to a large increase in earned income, employment, assets, real estate, secured debt, home ownership, and wealth that persists for more than 25 years after a court ruling. The net transition of workers into employment accounts for two thirds of the increase in earned income.

Suggested Citation

  • Gustaf Bruze & Alexander Kjær Hilsløv & Jonas Maibom, 2024. "The Long-Run Effects of Individual Debt Relief," CESifo Working Paper Series 11159, CESifo.
    • Handle: RePEc:ces:ceswps:_11159
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo1_wp11159.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Martin Eckhoff Andresen, 2018. "Exploring marginal treatment effects: Flexible estimation using Stata," Stata Journal, StataCorp LP, vol. 18(1), pages 118-158, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Olivier De Groote & Koen Declercq, 2021. "Tracking and specialization of high schools: Heterogeneous effects of school choice," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 36(7), pages 898-916, November.
    2. Wang, Tong & Jin, Hailong, 2024. "Impact of cost share programs on conservation practice adoption: A new perspective," 2024 Annual Meeting, July 28-30, New Orleans, LA 343974, Agricultural and Applied Economics Association.
    3. Vitor Possebom, 2021. "Crime and Mismeasured Punishment: Marginal Treatment Effect with Misclassification," Papers 2106.00536, arXiv.org, revised Jul 2023.
    4. Yuki Otsu, 2024. "Does visitation in prison reduce recidivism?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 43(1), pages 126-156, January.
    5. Hoshino Tadao & Yanagi Takahide, 2022. "Estimating marginal treatment effects under unobserved group heterogeneity," Journal of Causal Inference, De Gruyter, vol. 10(1), pages 197-216, January.
    6. Tafti, Elena Ashtari, 2023. "Technology, Skills, and Performance: The Case of Robots in Surgery," CINCH Working Paper Series (since 2020) 78746, Duisburg-Essen University Library, DuEPublico.
    7. Bartalotti, Otávio & Kédagni, Désiré & Possebom, Vitor, 2023. "Identifying marginal treatment effects in the presence of sample selection," Journal of Econometrics, Elsevier, vol. 234(2), pages 565-584.
    8. Seyi Olalekan Olawuyi & Abbyssinia Mushunje, 2019. "Social Capital and Adoption of Alternative Conservation Agricultural Practices in South-Western Nigeria," Sustainability, MDPI, vol. 11(3), pages 1-20, January.
    9. Williams Ali & Awudu Abdulai & Renan Goetz & Victor Owusu, 2021. "Risk, ambiguity and willingness to participate in crop insurance programs: Evidence from a field experiment," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(3), pages 679-703, July.
    10. Anna Wilding & Luke Munford & Matt Sutton, 2023. "Estimating the heterogeneous health and well‐being returns to social participation," Health Economics, John Wiley & Sons, Ltd., vol. 32(9), pages 1921-1940, September.
    11. Laura Schmitz, 2022. "Heterogeneous Effects of After-School Care on Child Development," Discussion Papers of DIW Berlin 2006, DIW Berlin, German Institute for Economic Research.
    12. Alberto Posso & Nicholas Bodanac & Facundo Palermo, 2023. "The impact of economic hardships on the intent to migrate: Micro‐level evidence from Venezuela," The World Economy, Wiley Blackwell, vol. 46(3), pages 653-680, March.
    13. Marco Castillo & Sera Linardi & Ragan Petrie, 2024. "Recidivism and Barriers to Reintegration: A Field Experiment Encouraging Use of Reentry Support," CESifo Working Paper Series 11554, CESifo.
    14. Agan, Amanda & Doleac, Jennifer & Harvey, Anna, 2021. "Misdemeanor Prosecution," IZA Discussion Papers 14234, Institute of Labor Economics (IZA).
    15. Olasehinde, Toba Stephen & Jin, Ye & Qiao, Fangbin & Mao, Shiping, 2023. "Marginal returns on Chinese agricultural technology transfer in Nigeria: Who benefits more?," China Economic Review, Elsevier, vol. 78(C).
    16. Spanos, Yiannis E., 2021. "Exploring heterogeneous returns to collaborative R&D: A marginal treatment effects perspective," Research Policy, Elsevier, vol. 50(5).
    17. Adam, Baba & Abdulai, Awudu, 2022. "Heterogeneity in the Impact of Conservation Agriculture Practices on Farm Performance and Inorganic Fertilizer Use in Ghana," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 47(2), May.
    18. Péron, M.; & Dormont, B.;, 2018. "Heterogeneous moral hazard in Supplementary Health Insurance," Health, Econometrics and Data Group (HEDG) Working Papers 18/27, HEDG, c/o Department of Economics, University of York.
    19. Sarr, Mare & Bezabih Ayele, Mintewab & Kimani, Mumbi E. & Ruhinduka, Remidius, 2021. "Who benefits from climate-friendly agriculture? The marginal returns to a rainfed system of rice intensification in Tanzania," World Development, Elsevier, vol. 138(C).
    20. Theresa Chaudhry & Rabia Arif, 2024. "The Impact of Consanguineous Marriage on Children’s Human Capital in Pakistan," Journal of South Asian Development, , vol. 19(1), pages 112-137, April.

    More about this item

    Keywords

    debt relief; personal bankruptcy; household finance;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • K35 - Law and Economics - - Other Substantive Areas of Law - - - Personal Bankruptcy Law

    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:ces:ceswps:_11159. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.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.