Labor Market Polarization and Student Debt
With the Lunch Seminar series, the Department of Finance is bringing eminent and up-and-coming researchers from around the world to Luxembourg.
Abstract:
This paper uses a new empirical design to explore how labor market polarization affects individuals’ incentive to pursue education funded on the margin by student debt. We argue that the labor market polarization – where automation replaces mid-skill and mid-education -level jobs – changes the marginal benefits of education and training and sharpens incentives to incur student debt. We advance a new measure of labor market polarizations that allows to capture the heterogeneity of this phenomena across geographies and time. Using this measure, we find that U.S. CBSAs that experience deeper labor market polarization see an increase in student debt balances and in the number of people pursuing student debt. On average, the decline in middle-skill jobs and wages has little effect on individuals’ ability to pay down existing student debt. The effects are most pronounced in ZIP codes with lower average credit scores, lower incomes, and higher share of the minority population.
About Prof. Elena Loutskina:
Prof. Elena Loutskina, Professor of Business Administration and Peter M. Grant II Bicentennial Foundation Chair in Business Administration, teaches in the Finance area. Loutskina’s research focuses on financial intermediation. She originally started her work by exploring the impact of securitization on management of financial and nonfinancial companies. Over time, her research interest expanded to exploring more dimensions of commercial banks strategic management. Her papers have addressed topics in consumer finance, mortgage markets, small business lending and regulation of financial intermediaries. Her work has been published in top academic journals in the area of finance including the Journal of Finance, Review of Financial Studies and the Journal of Financial Economics.
Language: English
This is a free seminar. Registration is mandatory.
The seminar will be held in person.
Cold lunches are provided to registered participants.
Supported by the Luxembourg National Research Fund (FNR) 17984041