RIEB Seminar
RIEB Seminar
RIEB Seminar
Jointly Supported by Rokko Forum
| Date & Time | Tuesday, October 01, 2024, 15:10 - 16:40 |
|---|---|
| Place | Meeting Room at RIEB (Annex, 2nd Floor) |
| Intended Audience | Faculty, Graduate Students, and People with Equivalent Knowledge |
| Langage | English |
| Registration | Registration is required. The seminar details will be sent to the registered emails. Registration Form (Due: Sep 26) |
15:10 - 16:40
- Topic
- The Role of Marital Status for the Evaluation of Bankruptcy Regimes
- Speaker
- Tsung-Hsien LI (Institute of Economics, Academia Sinica )
- Abstract
- The consumer finance literature has emphasized the importance of income and expense risk for the evaluation of bankruptcy regimes. Single and married households differ in the risks they face. In this paper, we build the first quantitative consumer default model that explicitly models singles and couples. We calibrate our model to the United States in 2019 and estimate expense shocks separately for single and married individuals. Our calibrated model generates large differences in bankruptcy rates across marital status as in the data. We examine how the preferred degree of bankruptcy leniency differs between singles and couples. There are several channels at work: Differences on the income side between singles and couples cause couples to prefer a stricter bankruptcy regime due to the intra-household insurance channel. However, increased risk for couples due to divorce and on the expense side outweighs the first channel. The net effect is that couples prefer more lenient bankruptcy than singles. Our findings suggest that marital status is important to take into account for the evaluation of bankruptcy regimes.