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Working Paper
The role of small business in economic development
This paper sets out to evaluate the role that entrepreneurs and small businesses play in economic development. How important are entrepreneurs and small businesses in creating jobs, and are these the types of jobs that should be encouraged? How important are entrepreneurs and small businesses in the development of new products and new markets? Does promoting entrepreneurship and small businesses make sense as an economic development strategy? The answer is yes, but with some qualifications. Small businesses are potent job creators, but so are large businesses. The attribution of the bulk of ...
Journal Article
Could restrictions on payday lending hurt consumers?
The payday loan, or more generally, the deferred deposit loan, is among the most contentious forms of credit. It typically signifies a small-dollar, short-term, unsecured loan to a high-risk borrower, often resulting in an effective annual percentage rate of 390 percent a rate well in excess of usury limits set by many states. Consumer advocates argue that payday loans take advantage of vulnerable, uninformed borrowers and often create ?debt spirals.? Debt spirals arise from repeated payday borrowing, using new loans to pay off old ones, and often paying many times the original loan amount in ...
Journal Article
Rural Hospital Closures and Growth in Employment and Wages
Since 2011, 74 hospitals have closed in rural counties isolated from larger towns. I evaluate the implications for employment and aggregate wage growth in these counties and find that hospital closures are associated with substantially lower annual growth in county employment and aggregate wages. Smaller counties with a greater share of hospital employment in total employment may see the most severe economic outcomes.
Journal Article
Residential Rent Affordability across U.S. Metropolitan Areas
Kelly D. Edmiston examines recent trends in rent affordability for both low- and middle-income households and across metropolitan areas.
Working Paper
Financial education at the workplace: evidence from a survey of Federal Reserve Bank employees
There are a number of possible explanations for the seemingly irresponsible financial behavior of many Americans. In this paper we argue that an important explanation is simply ignorance: consumers often make poor financial decisions because they do not know how to make good ones. In particular, we stress that consumers may not realize the importance of saving for the future, and that they may not perceive the trouble they can bring upon themselves by incurring large amounts of unsecured debt. Using survey data from employees of the Federal Reserve Bank of Kansas City, we demonstrate that, at ...
Journal Article
The low- and moderate- income population in recession and recovery: results from a new survey
The worst recession in U.S. postwar history, starting in late 2007, confronted low- and moderate-income families and individuals with distinct challenges. To address the severe lack of data on the "LMI," population, the Kansas City Fed launched its LMI Survey in 2009. ; Distributed to more than 700 organizations that provide services to the LMI population, the Survey elicits a wealth of qualitative reporting. It also produces quantitative data, including several quarterly indexes that track changes in LMI financial conditions over time. ; Edmiston summarizes insights from the Survey on ...
Journal Article
Characteristics of high foreclosure neighborhoods in the Tenth District
The foreclosure crisis that began in earnest in 2006 continues to shrink the once valuable assets of homeowners, communities, and investors. In the last three years, more than three million households have lost their homes, and as many as 5 million more could lose their homes in the next three years. ; A striking feature of the crisis is the variation in its severity across both time and space. Initially, the foreclosure crisis hit low-income neighborhoods disproportionately. Foreclosures remain concentrated in these neighborhoods. But in recent months, the foreclosure epidemic has spread ...
Journal Article
Rising foreclosures in the United States: a perfect storm
Residential foreclosures in the United States have been rising very rapidly since 2006. In the second quarter of 2007, the share of outstanding mortgages in some stage of foreclosure stood at 1.4 percent, near historic highs and up from less than 1 percent a year earlier. The number of mortgages entering the foreclosure process reached an all-time high in mid-2007, suggesting that the foreclosure surge is likely to get worse before it gets better. ; The foreclosure surge was created by a perfect storm of events. First, in recent years the share of subprime mortgage originations increased ...
Working Paper
Student loan relief programs: implications for borrowers and the federal government
As college costs increase and more students fund their education through borrowing, debt load and delinquency rates have become significant problems on a number of levels. Student loan obligations are challenging to manage for new graduates with lower earnings and borrowers in financial hardship. This paper discusses the federal student loan repayment relief programs that are available and estimates their borrower and fiscal impacts. The implications of relief plans on borrowers? costs and the federal budget vary for different loan amounts, income levels, and relief program. {{p}} It is ...