Consumers seek restitution for disputed financial services by filing complaints with the Consumer Financial Protection Bureau (CFPB). We find that filings from low-socioeconomic (i.e., low-income and African American) zip codes were 30% less likely to be resolved with the consumer receiving financial restitution. At the same time, low- and high-socioeconomic zip codes submitted an equal share of the CFPB complaints. The socioeconomic gap in financial restitution was scarcely present under the Obama administration, but grew substantially under the Trump administration. We attribute the change in financial restitution under different political regimes to companies anticipating a more industry-friendly CFPB, as well as to the more industry-friendly leadership of the CFPB achieving less financial restitution for low-socioeconomic filers. The financial restitution gap cannot be explained by differences in product usage nor the quality of complaints, which we measure using textual analysis.
{"title":"The Financial Restitution Gap in Consumer Finance: Insights from Complaints Filed with the CFPB","authors":"Charlotte Haendler, Rawley Z. Heimer","doi":"10.2139/ssrn.3766485","DOIUrl":"https://doi.org/10.2139/ssrn.3766485","url":null,"abstract":"Consumers seek restitution for disputed financial services by filing complaints with the Consumer Financial Protection Bureau (CFPB). We find that filings from low-socioeconomic (i.e., low-income and African American) zip codes were 30% less likely to be resolved with the consumer receiving financial restitution. At the same time, low- and high-socioeconomic zip codes submitted an equal share of the CFPB complaints. The socioeconomic gap in financial restitution was scarcely present under the Obama administration, but grew substantially under the Trump administration. We attribute the change in financial restitution under different political regimes to companies anticipating a more industry-friendly CFPB, as well as to the more industry-friendly leadership of the CFPB achieving less financial restitution for low-socioeconomic filers. The financial restitution gap cannot be explained by differences in product usage nor the quality of complaints, which we measure using textual analysis.","PeriodicalId":130325,"journal":{"name":"ERN: Household (Topic)","volume":"27 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-01-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122311234","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Financial disclosure requirements are common accountability measures placed on publicly funded organizations. However, the impact of financial disclosure requirements on organizational structure or on financial contributors’ behavior is not well understood in the context of non-profit organizations. I explore this question by analyzing mandatory Form 990-T disclosure included in the Pension Protection Act. This contributes to the understanding of organizational and financial contributor response to mandatory disclosure in an environment already requiring operation data disclosure. I use a difference-in-differences approach, comparing organizations filing a Form 990-T at least once in the three years prior to passage to those who did not. I find that one in four filing organizations create a subsidiary in the following two filing years. Subsidiary tax filings are not subject to disclosure, indicating that non-profits can restructure their organizations in a manner allowing them to circumvent disclosure requirements. While charities alter their organizational structure, I find no evidence of net changes in donor behavior towards charities, as aggregate total contributions and government grants received do not change.
{"title":"Does Additional Mandatory Reporting Alter Charity or Donor Behavior? Examining the 2006 Pension Protection Act","authors":"J. Oxley","doi":"10.2139/ssrn.3711094","DOIUrl":"https://doi.org/10.2139/ssrn.3711094","url":null,"abstract":"Financial disclosure requirements are common accountability measures placed on publicly funded organizations. However, the impact of financial disclosure requirements on organizational structure or on financial contributors’ behavior is not well understood in the context of non-profit organizations. I explore this question by analyzing mandatory Form 990-T disclosure included in the Pension Protection Act. This contributes to the understanding of organizational and financial contributor response to mandatory disclosure in an environment already requiring operation data disclosure. I use a difference-in-differences approach, comparing organizations filing a Form 990-T at least once in the three years prior to passage to those who did not. I find that one in four filing organizations create a subsidiary in the following two filing years. Subsidiary tax filings are not subject to disclosure, indicating that non-profits can restructure their organizations in a manner allowing them to circumvent disclosure requirements. While charities alter their organizational structure, I find no evidence of net changes in donor behavior towards charities, as aggregate total contributions and government grants received do not change.","PeriodicalId":130325,"journal":{"name":"ERN: Household (Topic)","volume":"2 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-10-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128862282","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Entitlement conditions are a little explored dimension of unemployment insurance (UI) schemes. In this paper, we provide a comprehensive evaluation of a reform that softened the minimum employment record condition to qualify for UI benefits in France after 2009. Using administrative panel data matching employment and unemployment spells, we first provide clear evidence that the reform induced a separation response at the eligibility threshold. It appears both at the micro level – through a jump in transitions from employment to unemployment – and at the macro level – through the scheduling of shorter contracts, in line with the new eli- gibility requirements. Exploiting the reform as well as relevant sample restrictions, we then estimate the effects of receiving UI benefits on subsequent labour market outcomes using a regression discontinuity design. Our findings point to a large negative impact of UI benefits receipt on employment probability up to 21 months after meeting the eligibility criterion, which is not counterbalanced by an increase in job quality.
{"title":"Entitled to Leave: The impact of Unemployment Insurance Eligibility on Employment Duration and Job Quality","authors":"L. Khoury, Clément Brébion, S. Briole","doi":"10.2139/ssrn.3519901","DOIUrl":"https://doi.org/10.2139/ssrn.3519901","url":null,"abstract":"Entitlement conditions are a little explored dimension of unemployment insurance (UI) schemes. In this paper, we provide a comprehensive evaluation of a reform that softened the minimum employment record condition to qualify for UI benefits in France after 2009. Using administrative panel data matching employment and unemployment spells, we first provide clear evidence that the reform induced a separation response at the eligibility threshold. It appears both at the micro level – through a jump in transitions from employment to unemployment – and at the macro level – through the scheduling of shorter contracts, in line with the new eli- gibility requirements. Exploiting the reform as well as relevant sample restrictions, we then estimate the effects of receiving UI benefits on subsequent labour market outcomes using a regression discontinuity design. Our findings point to a large negative impact of UI benefits receipt on employment probability up to 21 months after meeting the eligibility criterion, which is not counterbalanced by an increase in job quality.","PeriodicalId":130325,"journal":{"name":"ERN: Household (Topic)","volume":"3 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-01-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121238866","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Starting in 1982, the Alaska Permanent Fund Dividend allows each full-time resident in Alaska, including infants born in the qualifying year, to receive a sizable dividend. This dividend, which represents a form of a Universal Basic Income on a small scale, could alter incentives surrounding fertility. Using synthetic control and difference-in-differences models to account for confounding factors and unobserved heterogeneity, we model the effect of income on fertility by exploiting this income shock around 1982 using Natality files from Vital Statistics and abortion data from the Centers for Disease Control, merged with data from the Census on various state characteristics. Primary results suggest that the dividend increased fertility and reduced the spacing between births, particularly for females in the 20-44 year age group. Our results suggest that policies aimed at increasing income should consider fertility consequences and their implications for economic growth.
{"title":"Economic Incentives Surrounding Fertility: Evidence from Alaska's Permanent Fund Dividend","authors":"N. Yonzan, Laxman Timilsina, I. Kelly","doi":"10.3386/w26712","DOIUrl":"https://doi.org/10.3386/w26712","url":null,"abstract":"Starting in 1982, the Alaska Permanent Fund Dividend allows each full-time resident in Alaska, including infants born in the qualifying year, to receive a sizable dividend. This dividend, which represents a form of a Universal Basic Income on a small scale, could alter incentives surrounding fertility. Using synthetic control and difference-in-differences models to account for confounding factors and unobserved heterogeneity, we model the effect of income on fertility by exploiting this income shock around 1982 using Natality files from Vital Statistics and abortion data from the Centers for Disease Control, merged with data from the Census on various state characteristics. Primary results suggest that the dividend increased fertility and reduced the spacing between births, particularly for females in the 20-44 year age group. Our results suggest that policies aimed at increasing income should consider fertility consequences and their implications for economic growth.","PeriodicalId":130325,"journal":{"name":"ERN: Household (Topic)","volume":"30 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115629044","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines the labor market effects of unemployment insurance extensions. It uses administrative Social Security matched employer-employee data from Austria. Critical components of the analysis are effects on wages as well as retirement/job separation effects.
{"title":"The Equilibrium and Spillover Effects of Early Retirement","authors":"Simon Jäger, B. Schoefer, J. Zweimüller","doi":"10.2139/ssrn.3520192","DOIUrl":"https://doi.org/10.2139/ssrn.3520192","url":null,"abstract":"This paper examines the labor market effects of unemployment insurance extensions. It uses administrative Social Security matched employer-employee data from Austria. Critical components of the analysis are effects on wages as well as retirement/job separation effects.","PeriodicalId":130325,"journal":{"name":"ERN: Household (Topic)","volume":"53 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130031461","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In the U.S., individuals who file for bankruptcy can protect a certain amount of property from creditor liquidation during the debt settlement process. Our analysis exploits changes in these laws to determine the impact on home mortgage lending. We find that the additional debtor protection reduces the likelihood of denial for home purchases and loan applications that are secured by a first lien. However, the denial rate of non-first lien purchases and home improvement loans increases as a result of higher exemption limits. We also find that applications in each affected census tract increase, leading to more approvals, loan issuance, and denials as a result of each change.
{"title":"Changes in Personal Bankruptcy Protection Laws: The Impact to Home Mortgage Lending","authors":"Jason Damm, Masim Suleymanov","doi":"10.2139/ssrn.3314880","DOIUrl":"https://doi.org/10.2139/ssrn.3314880","url":null,"abstract":"In the U.S., individuals who file for bankruptcy can protect a certain amount of property from creditor liquidation during the debt settlement process. Our analysis exploits changes in these laws to determine the impact on home mortgage lending. We find that the additional debtor protection reduces the likelihood of denial for home purchases and loan applications that are secured by a first lien. However, the denial rate of non-first lien purchases and home improvement loans increases as a result of higher exemption limits. We also find that applications in each affected census tract increase, leading to more approvals, loan issuance, and denials as a result of each change.","PeriodicalId":130325,"journal":{"name":"ERN: Household (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129616989","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The rules of thumb offered by financial advisors regarding how much to hold in liquid reserves vary widely and usually imply far greater sums than low-income households save. This paper seeks empirically-grounded insights into the minimum liquidity buffer needed by the average low-income household. First, we document diminishing benefits to liquid savings in terms of the likelihood of experiencing financial hardship. Then, we formalize this relationship with a theory of poverty traps. Finally, to observed data, we fit a regression kink model with an unknown threshold (kink) point that must be estimated. Our key finding is that the threshold point is $2,467 with a 95% confidence interval of $1,814–$3,011 (in 2019 dollars) or roughly 1 month of income for the average low-income household – which is far less than the savings amounts implied by common rules of thumb (typically 3–6 months of income). Theoretical evidence suggests that financial advice based on an empirically-estimated threshold point is welfare enhancing for households with naive perceptions of their probability of experiencing financial problems.
{"title":"Rules of Thumb in Household Savings Decisions: Estimation Using Threshold Regression","authors":"J. Sabat, Emily Gallagher","doi":"10.2139/ssrn.3455696","DOIUrl":"https://doi.org/10.2139/ssrn.3455696","url":null,"abstract":"The rules of thumb offered by financial advisors regarding how much to hold in liquid reserves vary widely and usually imply far greater sums than low-income households save. This paper seeks empirically-grounded insights into the minimum liquidity buffer needed by the average low-income household. First, we document diminishing benefits to liquid savings in terms of the likelihood of experiencing financial hardship. Then, we formalize this relationship with a theory of poverty traps. Finally, to observed data, we fit a regression kink model with an unknown threshold (kink) point that must be estimated. Our key finding is that the threshold point is $2,467 with a 95% confidence interval of $1,814–$3,011 (in 2019 dollars) or roughly 1 month of income for the average low-income household – which is far less than the savings amounts implied by common rules of thumb (typically 3–6 months of income). Theoretical evidence suggests that financial advice based on an empirically-estimated threshold point is welfare enhancing for households with naive perceptions of their probability of experiencing financial problems.","PeriodicalId":130325,"journal":{"name":"ERN: Household (Topic)","volume":"81 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-09-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121885027","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using a Bayesian SVAR analysis, we document that an increase in government purchases raises private consumption, the real wage and total factor productivity (TFP) while reducing inflation. Each of these facts is hard to reconcile with both neoclassical and New-Keynesian models. We extend a standard New-Keynesian model to allow for skill accumulation through past work experience, following Chang, Gomes and Schorfheide (2002). An increase in government spending increases hours and induces skill accumulation and higher measured TFP and real wages in subsequent periods. Future marginal costs fall lowering future expected inflation and, through the monetary policy rule, the real interest rate. Consumption increases as a result.
{"title":"Fiscal Stimulus with Learning-by-Doing","authors":"Antonello dAlessandro, Giulio Fella, Leonardo Melosi","doi":"10.21033/wp-2018-09","DOIUrl":"https://doi.org/10.21033/wp-2018-09","url":null,"abstract":"Using a Bayesian SVAR analysis, we document that an increase in government purchases raises private consumption, the real wage and total factor productivity (TFP) while reducing inflation. Each of these facts is hard to reconcile with both neoclassical and New-Keynesian models. We extend a standard New-Keynesian model to allow for skill accumulation through past work experience, following Chang, Gomes and Schorfheide (2002). An increase in government spending increases hours and induces skill accumulation and higher measured TFP and real wages in subsequent periods. Future marginal costs fall lowering future expected inflation and, through the monetary policy rule, the real interest rate. Consumption increases as a result.","PeriodicalId":130325,"journal":{"name":"ERN: Household (Topic)","volume":"7 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125738816","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study adoption by more than 150,000 households of an optional transitional water tariff implemented in the South-East of England in conjunction with an universal metering programme. We document how inertia leads customers to relinquish substantial financial gains, with less than a third of customers who would benefit from adopting the transitional tariff actually doing so. We also show how households responds not only to overall gains, but also to more short-term gains from adopting the tariff. Households in high income/high education neighbourhoods display a higher responsiveness to potential savings, as do households where the contract holder is of prime age instead of being more senior or junior. Finally, the probability of adoption is positively impacted by adoption by neighbours, thus suggesting the presence of peer effects. We also look at the timing of the call, showing how most customers choose to call early on, when less information is available, but the issue is more prominent. The choice of when to call is consistent with customers taking into account the option value of waiting, as well as future consumption patterns.
{"title":"Water Tariffs and Consumers' Inaction","authors":"Carmine Ornaghi, M. Tonin","doi":"10.2139/ssrn.3194457","DOIUrl":"https://doi.org/10.2139/ssrn.3194457","url":null,"abstract":"We study adoption by more than 150,000 households of an optional transitional water tariff implemented in the South-East of England in conjunction with an universal metering programme. We document how inertia leads customers to relinquish substantial financial gains, with less than a third of customers who would benefit from adopting the transitional tariff actually doing so. We also show how households responds not only to overall gains, but also to more short-term gains from adopting the tariff. Households in high income/high education neighbourhoods display a higher responsiveness to potential savings, as do households where the contract holder is of prime age instead of being more senior or junior. Finally, the probability of adoption is positively impacted by adoption by neighbours, thus suggesting the presence of peer effects. We also look at the timing of the call, showing how most customers choose to call early on, when less information is available, but the issue is more prominent. The choice of when to call is consistent with customers taking into account the option value of waiting, as well as future consumption patterns.","PeriodicalId":130325,"journal":{"name":"ERN: Household (Topic)","volume":"24 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128395371","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Collective rationality is seldom if ever rejected in the literature, raising doubt about its falsifiability. We show that the standard approach to test the collective model with distribution factors may yield misleading inference. We develop a new test procedure to assess its validity. Our approach extends to households that potentially include more than two decision-makers (e.g., polygamous households, adult children). We provide a brief and informal meta-analysis that suggests that much of the evidence in favour of collective rationality in the empirical literature appears to be inconsistent with our test. We illustrate the latter using data from a survey we have conducted in Burkina Faso. Collective rationality within monogamous households is not rejected using the standard testing procedure while it is clearly rejected using our proposed test procedure. Furthermore, our test also rejects collective rationality for bigamou households. We conclude that the household efficiency does yield empirically falsifiable restrictions despite being scarcely rejected in the literature.
{"title":"How Falsifiable Is Collective Rationality?","authors":"Anyck Dauphin, B. Fortin, G. Lacroix","doi":"10.2139/ssrn.3175379","DOIUrl":"https://doi.org/10.2139/ssrn.3175379","url":null,"abstract":"Collective rationality is seldom if ever rejected in the literature, raising doubt about its falsifiability. We show that the standard approach to test the collective model with distribution factors may yield misleading inference. We develop a new test procedure to assess its validity. Our approach extends to households that potentially include more than two decision-makers (e.g., polygamous households, adult children). We provide a brief and informal meta-analysis that suggests that much of the evidence in favour of collective rationality in the empirical literature appears to be inconsistent with our test. We illustrate the latter using data from a survey we have conducted in Burkina Faso. Collective rationality within monogamous households is not rejected using the standard testing procedure while it is clearly rejected using our proposed test procedure. Furthermore, our test also rejects collective rationality for bigamou households. We conclude that the household efficiency does yield empirically falsifiable restrictions despite being scarcely rejected in the literature.","PeriodicalId":130325,"journal":{"name":"ERN: Household (Topic)","volume":"3 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131810542","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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