Research / BFI Working PaperJul 31, 2020

The Economic Consequences of Bankruptcy Reform

Tal Gross, Raymond Kluender, Feng Liu, Matthew J. Notowidigdo, Jialan Wang

A more generous consumer bankruptcy system provides greater insurance against financial risks but may also raise the cost of credit. We study this trade-off using the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which increased the costs of filing for bankruptcy. We identify the effects of BAPCPA on borrowing costs using variation in the effects of the reform across credit scores. We find that a one-percentage-point reduction in bankruptcy-filing risk decreased credit-card interest rates by 70{90 basis points. Conversely, BAPCPA reduced the insurance value of bankruptcy, with uninsured hospitalizations 70 percent less likely to obtain bankruptcy relief after the reform.

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BFI Working Paper Aug 31, 2020

Who Profits From Amateurism? Rent-Sharing in Modern College Sports

Craig Garthwaite, Jordan Keener, Matthew J. Notowidigdo, Nicole F. Ozminkowski
Topics:  Higher Education & Workforce Training
BFI Working Paper May 24, 2021

A Welfare Analysis of Tax Structures with Love-of-Variety Preferences

Kory Kroft, Jean-William P. Laliberté, René Leal Vizcaíno, Matthew J. Notowidigdo
Topics:  Fiscal Studies
BFI Working Paper Sep 30, 2020

Temporary Unemployment and Labor Market Dynamics During the COVID-19 Recession

Jessica Gallant, Kory Kroft, Fabian Lange, Matthew J. Notowidigdo
Topics:  Employment & Wages