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The price of leverage: learning from the effect of LTV constraints on job search and wages

Kabas, Gazi; Roszbach, Kasper (2023). The price of leverage: learning from the effect of LTV constraints on job search and wages. SSRN 3835232, University of Zurich.

Abstract

Does households' leverage matter for their job search, matching in the labor market and pay? To answer this question we exploit a loan-to-value ratio restriction in Norway that exogenously reduces household leverage. Using comprehensive register data, we find that lower leverage enables displaced workers to find jobs with higher starting wages. Lower leverage increases the probability of finding jobs in higher paying firms and the likelihood of switching into new occupations and industries. The positive effects are long-lasting and more pronounced for young and higher educated workers. Our results indicate that policies aimed at limiting households' leverage have the potential to substantially improve their labor market outcomes.

Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Finance
Dewey Decimal Classification:330 Economics
Scope:Discipline-based scholarship (basic research)
Language:English
Date:23 March 2023
Deposited On:21 Sep 2023 15:00
Last Modified:20 Jun 2024 10:22
Series Name:SSRN
Number of Pages:60
ISSN:1556-5068
OA Status:Closed
Free access at:Publisher DOI. An embargo period may apply.
Publisher DOI:https://doi.org/10.2139/ssrn.3835232
Other Identification Number:merlin-id:21530
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