Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/324338 
Year of Publication: 
2025
Series/Report no.: 
IZA Discussion Papers No. 17940
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Using linked employer-employee data combined with administrative data on debt enforcement, we analyze the impact of job loss on debt problems in Finland, where even 50% of income may be subject to wage garnishment for up to 25 years. Our results show that job loss, defined by plant closures and mass layoffs, increases the incidence of enforced debt by approximately 10%, with the effect persisting for at least a decade. The impact is particularly large for unpaid taxes and various private debts, such as installment purchase payments. Moreover, the effects are stronger among individuals who were already burdened with excessive overall debt, such as mortgages, before displacement. We also document spillover effects on spouses and children, indicating that job loss can have far-reaching consequences for household indebtedness. However, we find no significant effect on filing for personal bankruptcy.
Subjects: 
employer-employee data
involuntary job loss
debt enforcement
default
personal bankruptcy
JEL: 
D14
G51
J64
J65
Document Type: 
Working Paper

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