Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/267944 
Year of Publication: 
2022
Series/Report no.: 
IFS Working Paper No. W22/13
Publisher: 
Institute for Fiscal Studies (IFS), London
Abstract: 
We specify and estimate a lifecycle model of consumption, housing demand and labor supply in an environment where individuals may file for bankruptcy or default on their mortgage. Uncertainty in the model is driven by house price shocks, education specific productivity shocks, and catastrophic consumption events, while bankruptcy is governed by the basic institutional framework in the US as implied by Chapter 7 and Chapter 13. The model is estimated using micro data on credit reports and mortgages combined with data from the American Community Survey. We use the model to understand the relative importance of the two chapters (7 and 13) for each of our two education groups that differ in both preferences and wage profiles. We also provide an evaluation of the BACPCA reform. Our paper demonstrates importance of distributional effects of Bankruptcy policy.
Subjects: 
Lifecycle
Bankruptcy
Mortgage Default
Labor Supply
Consumption
Education
Insurance
Moral hazard
JEL: 
G33
K35
J22
J31
D14
D18
D52
D53
E21
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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