Can Employer Credit Checks Create Poverty Traps? Theory and Policy Evaluation
2013/11/26
研討會日期 : 2013-11-26
時間 : 15:30
主講人 : Professor Daphne Chen
地點 : Conference Room C103
演講者簡介 : Professor Chen received her Ph.D. in Economics from University of Texas at Austin in 2011. She is currently Assistant Professor at Florida State University. Her research focuses on quantitative models with unsecured debt and bankruptcy.
演講摘要 : According to a Survey by the Society for Human Resource Management (2010), 60% of human resource representatives interviewed in 2009 indicated that the companies they worked for ran credit checks on potential employees. Legislators have become concerned that employer credit checks can create poverty traps and have therefore limited or outlawed their use in hiring and wage negotiations. This motivates us to explore how credit scores (generated by default decisions which are informative about an agent’s private productivity) affect wages and job finding rates in a labor search model. The model can generate a poverty trap in which unemployed households are more likely to default and therefore more likely to remain unemployed. Policy analysis in our model highlights the general equilibrium effect from eliminating employer credit checks, because they erode incentives to repay debts. We find that realistic policies are uniformly bad for workers due to this interaction with credit markets.
