On December 12, 2019, Fed in Print will introduce its new platform for discovering content. Please direct your questions to Anna Oates
Federal Reserve Bank of Richmond
Intergenerational Linkages in Household Credit
We document economically important correlations between children’s future credit outcomes and their parents’ credit risk scores, default, and the extent of credit constraints – intergenerational linkages in household credit. Using observations on siblings, we find that the linkages are due to unobserved household heterogeneity rather than parental credit conditions directly affecting children’s credit outcomes. In particular, in the sample of siblings, there is no correlation between parental and child credit attributes after controlling for household fixed effects. The linkages are stronger in cities with lower intergenerational income mobility, implying that common factors drive both. Finally, existing measures of state-level educational policy interventions appear to have limited effects on the strength of intergenerational linkages.
Cite this item
Andra C. Ghent & Marianna Kudlyak, Intergenerational Linkages in Household Credit, Federal Reserve Bank of Richmond, Working Paper 15-14, 05 Nov 2015.
- D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
Keywords: Household Finance; Intergenerational Mobility; Credit Constraints; Income Inequality
This item with handle RePEc:fip:fedrwp:15-14
is also listed on EconPapers
For corrections, contact Christian Pascasio ()