Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279034 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 16336
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We study the labor market and mental health impacts of debt relief among financially vulnerable individuals. We exploit a cutoff rule used by a Dutch welfare office to determine eligibility to debt relief of welfare debts. We use this cutoff as an instrument in both a fuzzy regression discontinuity and instrumented difference-in-difference design. With administrative data, we estimate economically small and insignificant effects of debt relief on employment, earnings, welfare receipt, and medication use for mental health problems. Subgroup analyses suggest that debt relief increases employment among debtors with larger welfare debts. The larger amount of debt relief for this group has probably a stronger potential to improve their overall debt position.
Subjects: 
debt relief
welfare debts
welfare recipients
fuzzy regression discontinuity design
instrumented difference-in-difference
JEL: 
G51
I38
J22
J64
J68
Document Type: 
Working Paper

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