William T. Dickens
Neil Alper, Osborne Jackson
Date of Award
Doctor of Philosophy
Department or Academic Unit
College of Social Sciences and Humanities, Department of Economics
economics, bankruptcy, consumer credit, credit check, credit history, earnings, propensity score matching
Economics | Economic Theory | Finance | Growth and Development | Labor Economics
Chapter 1: What Does Bankruptcy Tell an Employer About a Potential Employee?
Consumer bankruptcy is often considered in hiring and promotional decisions to be a productivity indicator; however, there is insubstantial quantitative research on whether bankruptcy is indicative of qualities not desirable in an employee. Bankruptcy history's ability to predict characteristics that employers care about is tested. The characteristics considered include intelligence, job turnover, health, drug use, and imprisonment. Logistic regressions and ordinary least squares are employed. Knowing whether the candidate filed for bankruptcy provides limited information on an applicant's intelligence, drug usage, and trouble with the law. However, it provides significant evidence that filers are more likely to leave their jobs and have inferior health. The findings are relevant to both employers and policymakers. Data is from the 1979 cohort of the National Longitudinal Survey of Youth.
Chapter 2: Does Filing Bankruptcy Impact Future Labor Market Outcomes?
Employment credit checks are utilized by employers to judge the quality of job applicants. One aspect of the credit report employers consider is bankruptcy filings. If filing bankruptcy is a negative signal, then it may `tag' the candidate in the labor market and reduce his or her future earnings. I examine data from the National Longitudinal Survey of Youth 1979 to see if a tagging effect from bankruptcy can be detected. Estimates from a fixed effects model show post-bankruptcy earnings are reduced by 7.5%. However, the propensity to file bankruptcy is highly dependent on variation in one's earnings and thus there are significant endogeneity concerns. To correct for this bias, several sources of exogenous variation are employed. First, earnings in occupations where employment credit checks are more or less common are compared. Second, variation in the tagging effect is analyzed depending on the prevalence of credit checks. No effects for bankruptcy can be found using these identification strategies.
Chapter 3: Do Employment Credit Checks Improve the Efficiency of the Labor Market?
In recent years employment credit checks have gained widespread use as a screening tool in hiring and promotional decisions. Seven states, Washington, Hawaii, Oregon, Illinois, Maryland, Connecticut, and California have limited employers' use of credit histories. This paper utilizes these laws to measure the effect of employment credit checks on the turnover rate. If employment credit reports are a reliable indicator of an applicant's quality and suitability for a job, then the use of credit checks should improve the efficiency of the labor market. Therefore, the passage of these laws should reduce the efficiency of the employer-employee match and increase turnover. The Current Population Survey (CPS) provides a large dataset from which I can precisely measure small changes in turnover between May 2004 and December 2011. Several methods are employed: interrupted time series analysis, regression controls, difference-in-difference, and propensity score matching. There is no evidence that limiting employer credit checks influences turnover.
Forsell, Tess, "Three essays on consumer cedit history and the labor market" (2012). Economics Dissertations. Paper 7. http://hdl.handle.net/2047/d20002538
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