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Liberty Street Economics
30 posts on "Inequality"September 25, 2020
Investigating the Effect of Health Insurance in the COVID-19 Pandemic
Does health insurance improve health? This question, while apparently a tautology, has been the subject of considerable economic debate. In light of the COVID-19 pandemic, it has acquired a greater urgency as the lack of universal health insurance has been cited as a cause of the profound racial gap in coronavirus cases, and as a cause of U.S. difficulties in managing the pandemic more generally. However, estimating the effect of health insurance is difficult because it is (generally) not assigned at random. In this post, we approach this question in a novel way by exploiting a natural experiment—the adoption of the Affordable Care Act (ACA) Medicaid expansion by some states but not others—to tease out the causal effect of a type of health insurance on COVID-19 intensity.
Continue reading "Investigating the Effect of Health Insurance in the COVID-19 Pandemic" »
August 19, 2020
Debt Relief and the CARES Act: Which Borrowers Face the Most Financial Strain?
In yesterday's post, we studied the expected debt relief from the CARES Act on mortgagors and student debt borrowers. We now turn our attention to the 63 percent of American borrowers who do not have a mortgage or student loan. These borrowers will not directly benefit from the loan forbearance provisions of the CARES Act, although they may be able to receive some types of leniency that many lenders have voluntarily provided. We ask who these borrowers are, by age, geography, race and income, and how does their financial health compare with other borrowers.
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Posted by Blog Author at 7:00 AM in Credit, Demographics, Household Finance, Inequality, Pandemic | Permalink | Comments (0)August 18, 2020
Debt Relief and the CARES Act: Which Borrowers Benefit the Most?
COVID-19 and associated social distancing measures have had major labor market ramifications, with massive job losses and furloughs. Millions of people have filed jobless claims since mid-March—6.9 million in the week of March 28 alone. These developments will surely lead to financial hardship for millions of Americans, especially those who hold outstanding debts while facing diminishing or disappearing wages. The CARES Act, passed by Congress on April 2, 2020, provided $2.2 trillion in disaster relief to combat the economic impacts of COVID-19. Among other measures, it included mortgage and student debt relief measures to alleviate the cash flow problems of borrowers. In this post, we examine who could benefit most (and by how much) from various debt relief provisions under the CARES Act.
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Posted by Blog Author at 7:00 AM in Demographics, Education, Household Finance, Housing, Inequality, Mortgages, Recession, Regulation, Student Loans | Permalink | Comments (2)August 17, 2020
Are Financially Distressed Areas More Affected by COVID-19?
Editor’s note: When this post was first published, the columns in the second table were mislabeled; the table has been corrected. (August 19, 9:30 a.m.)
Building upon our earlier Liberty Street Economics post, we continue to analyze the heterogeneity of COVID-19 incidence. We previously found that majority-minority areas, low-income areas, and areas with higher population density were more affected by COVID-19. The objective of this post is to understand any differences in COVID-19 incidence by areas of financial vulnerability. Are areas that are more financially distressed affected by COVID-19 to a greater extent than other areas? If so, this would not only further adversely affect the financial well-being of the individuals in these areas, but also the local economy. This post is the first in a three-part series looking at heterogeneity in the credit market as it pertains to COVID-19 incidence and CARES Act debt relief.
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Posted by Blog Author at 7:00 AM in Crisis, Demographics, Education, Household Finance, Inequality, Mortgages, Pandemic, Student Loans | Permalink | Comments (0)August 13, 2020
The Disproportionate Effects of COVID-19 on Households with Children
A growing body of evidence points to large negative economic and health impacts of the COVID-19 pandemic on low-income, Black, and Hispanic Americans (see this LSE post and reports by Pew Research and Harvard). Beyond the consequences of school cancellations and lost social interactions, there exists considerable concern about the long-lasting effects of economic hardship on children. In this post, we assess the extent of the underlying economic and financial strain faced by households with children living at home, using newly collected data from the monthly Survey of Consumer Expectations (SCE).
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Posted by Blog Author at 7:00 AM in Crisis, Household, Household Finance, Inequality, Pandemic | Permalink | Comments (3)July 08, 2020
Medicare and Financial Health across the United States
Editor’s note: When this post was first published, a reference in the penultimate paragraph to the “elderly” was incorrect; the reference has been corrected to the “near-elderly.” (September 17, 2020, 11:10 a.m.)
Consumer financial strain varies enormously across the United States. One pernicious source of financial strain is debt in collections—debt that is more than 120 days past due and that has been sold to a collections agency. In Massachusetts, the average person has less than $100 in collections debt, while in Texas, the average person has more than $300. In this post, we discuss our recent staff report that exploits the fact that virtually all Americans are universally covered by Medicare at 65 to show that health insurance not only improves financial health on average, but also is a major explanation for the heterogeneity in financial strain across the country. We find that Medicare affects different parts of the United States differently and plays a particularly important role in improving financial health in the least advantaged areas.
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Do College Tuition Subsidies Boost Spending and Reduce Debt? Impacts by Income and Race
In an October post, we showed the effect of college tuition subsidies in the form of merit-based financial aid on educational and student debt outcomes, documenting a large decline in student debt for those eligible for merit aid. Additionally, we reported striking differences in these outcomes by demographics, as proxied by neighborhood race and income. In this follow-up post, we examine whether and how this effect passes through to other debt and consumption outcomes, namely those related to autos, homes, and credit cards. We find that access to merit aid leads to an immediate but temporary increase in eligible individuals’ consumption in these categories. The increase is followed by a decline in consumption and a reduction in total debt of these types in the longer term. Importantly, there are marked differences in these consumption and debt patterns across income and race groups.
Posted by Blog Author at 7:45 AM in Education, Household Finance, Inequality, Student Loans | Permalink | Comments (0)Measuring Racial Disparities in Higher Education and Student Debt Outcomes
Across the United States, the cost of all types of higher education has been rising faster than overall inflation for more than two decades. Despite rising costs, aggregate undergraduate enrollment rose steadily between 2000 and 2010 before leveling off and dipping slightly to its current level. Rising college costs have steadily increased dependence on student debt for college financing, with many students and parents turning to federal and private loans to pay for higher education. An earlier post in this series reported that borrowers in majority Black areas have higher student loan balances and rates of default than those in both majority white and majority Hispanic areas. In this post, we study how differences in college attendance rates and in the types of colleges attended generate heterogeneity in loan experiences. Specifically, using nationwide data, we analyze heterogeneities in college-going and heterogeneities in student debt and default experiences by college type across individuals living in majority Black, majority Hispanic, and majority white zip codes.
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Posted by Blog Author at 7:30 AM in Education, Household Finance, Human Capital, Inequality, Labor Economics, Student Loans | Permalink | Comments (0)July 07, 2020
Introduction to Heterogeneity Series III: Credit Market Outcomes
Average economic outcomes serve as important indicators of the overall state of the economy. However, they mask a lot of underlying variability in how people experience the economy across geography, or by race, income, age, or other attributes. Following our series on heterogeneity broadly in October 2019 and in labor market outcomes in March 2020, we now turn our focus to further documenting heterogeneity in the credit market. While we have written about credit market heterogeneity before, this series integrates insights on disparities in outcomes in various parts of the credit market. The analysis includes a look at differing homeownership rates across populations, varying exposure to foreclosures and evictions, and uneven student loan burdens and repayment behaviors. It also covers heterogeneous effects of policies by comparing financial health outcomes for those with access to public tuition subsidies and Medicare versus those not eligible. The findings underscore that a measure of the average, particularly relating to policy impact, is far from complete. Rather, a sharper picture of the diverse effects is essential to understanding the efficacy of policy.
Continue reading "Introduction to Heterogeneity Series III: Credit Market Outcomes" »
Posted by Blog Author at 8:00 AM in Demographics, Education, Foreclosure, Household Finance, Housing, Inequality, Mortgages, Student Loans | Permalink | Comments (0)June 15, 2020
Distribution of COVID-19 Incidence by Geography, Race, and Income
In this post, we study whether (and how) the spread of COVID-19 across the United States has varied by geography, race, income, and population density. Have urban areas been more affected by COVID-19 than rural areas? Has population density mattered in the spread? Has the coronavirus's impact varied by race and income? Our analysis uncovers stark demographic and geographic differences in the effects of the pandemic thus far.
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Posted by Blog Author at 7:00 AM in Demographics, Inequality, Pandemic, Regional Analysis | Permalink | Comments (0)About the BlogLiberty Street Economics features insight and analysis from New York Fed economists working at the intersection of research and policy. Launched in 2011, the blog takes its name from the Bank’s headquarters at 33 Liberty Street in Manhattan’s Financial District.
The editors are Michael Fleming, Andrew Haughwout, Thomas Klitgaard, and Asani Sarkar, all economists in the Bank’s Research Group.
Liberty Street Economics does not publish new posts during the blackout periods surrounding Federal Open Market Committee meetings.
The views expressed are those of the authors, and do not necessarily reflect the position of the New York Fed or the Federal Reserve System.
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