Will Dobbie

The Impact of Voluntary Youth Service on Future Outcomes: Evidence from Teach For America

Abstract This paper provides causal estimates of the impact of service programs on those who serve, using data from a web-based survey of former Teach For America (TFA) applicants. We estimate the effect of voluntary youth service using a discontinuity in the TFA application process. Participating in TFA increases racial tolerance, makes individuals more optimistic about the life prospects of poor children, and makes them more likely to work in education.

Bad Credit, No Problem? Credit and Labor Market Consequences of Bad Credit Reports

Credit reports are used in nearly all consumer lending decisions and, increasingly, in hiring decisions in the labor market, but the impact of a bad credit report is largely unknown. We study the effects of credit reports on financial and labor market outcomes using a difference-in-differences research design that compares changes in outcomes over time for Chapter 13 filers, whose personal bankruptcy flags are removed from credit reports after 7 years, to changes for Chapter 7 filers, whose personal bankruptcy flags are removed from credit reports after 10 years. Using credit bureau data, we show that the removal of a Chapter 13 bankruptcy flag leads to a large increase in credit scores, and an economically significant increase in credit card balances and mortgage borrowing. We study labor market effects using administrative tax records linked to personal bankruptcy records. In sharp contrast to the credit market effects, we estimate a precise zero effect of flag removal on employment and earnings outcomes. We conclude that credit reports are important for credit market outcomes, where they are the primary source of information used to screen applicants, but are of limited consequence for labor market outcomes, where employers rely on a much broader set of screening mechanisms.

Information Asymmetries in Consumer Credit Markets: Evidence from Two Payday Lending Firms

This paper tests for incentive and selection effects in a subprime consumer credit market. We estimate the incentive effect of loan size on default using sharp discontinuities in loan eligibility rules. This allows us to estimate the magnitude of selection from the cross-sectional correlation between loan size and default. We find evidence of advantageous incentives and adverse selection. For a given borrower, we estimate that a

Information Asymmetries in Consumer Credit Markets: Evidence from Payday Loans

100 increase in loan size decreases the probability of default by 3.7 to 4.2 percentage points, a 20 to 23 percent decrease from the mean default rate. The incentive effect is more than o ffset by adverse selection into larger loans. Borrowers who choose

Are High-Quality Schools Enough to Increase Achievement among the Poor? Evidence from the Harlem Children's Zone

100 larger loans are 6.9 to 8.0 percentage points more likely to default than borrowers who choose smaller loans. Taken together, our results are consistent with the idea that information frictions lead to credit constraints in equilibrium.

Are High Quality Schools Enough to Close the Achievement Gap? Evidence from a Social Experiment in Harlem

This paper tests for incentive and selection effects in a subprime consumer credit market. We estimate the incentive effect of loan size on default using sharp discontinuities in loan eligibility rules. This allows us to estimate the magnitude of selection from the cross-sectional correlation between loan size and default. We find evidence of advantageous incentives and adverse selection. For a given borrower, we estimate that a

Debt Relief and Debtor Outcomes: Measuring the Effects of Consumer Bankruptcy Protection

100 increase in loan size decreases the probability of default by 3.7 to 4.2 percentage points, a 20 to 23 percent decrease from the mean default rate. The incentive effect is more than o ffset by adverse selection into larger loans. Borrowers who choose

Information Asymmetries in Consumer Credit Markets: Evidence from Payday Lending

100 larger loans are 6.9 to 8.0 percentage points more likely to default than borrowers who choose smaller loans. Taken together, our results are consistent with the idea that information frictions lead to credit constraints in equilibrium.