Jae Song

First name
Jae
Last name
Song
Abstract

We investigate the long-term effects of cash assistance for beneficiaries and their children by following up with participants in the Seattle-Denver Income Maintenance Experiment. Treated families in this randomized experiment received thousands of dollars annually in extra government benefits for three or five years in the 1970s. We match experimental records to Social Security Administration data using a novel algorithm and find that treatment decreased adults’ post-experimental annual earnings by $1,800 and increased disability benefit applications by 6.3 percentage points, possibly driven by occupational changes. In contrast, children in treated families experienced no significant effects on any main variable studied.

Year of Publication
2018
Number
621
Date Published
06/2018
Publication Language
eng
Citation Key
10626
Song, J., & Price, D. (2018). The Long-Term Effects of Cash Assistance. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01ng451m210 (Original work published 06/2018AD)
Working Papers
Abstract

This paper reports results from a randomized field experiment that offered distressed credit
card borrowers more than $50 million in debt forgiveness and over 27,500 additional months
to repay their debts. The experimental variation effectively randomized debt write-downs and
minimum payments for borrowers at eleven large credit card issuers. Merging information from
the experiment to administrative tax and bankruptcy records, we find that the debt write-downs
increased debt repayment and decreased bankruptcy ling. The debt write-downs also increased
formal sector employment for the most financially distressed borrowers. In contrast, we find little
impact of the lower minimum payments on debt repayment, bankruptcy, or employment. We
show that this null result can be explained by the positive short-run effect of increased liquidity
being o set by the unintended, negative effect of exposing borrowers to more default risk. We
conclude that debt relief is more effective than debt restructuring for distressed credit card
borrowers, even when these borrowers are liquidity constrained.

Year of Publication
2016
Number
599
Date Published
08/2016
Publication Language
eng
Citation Key
9636
Dobbie, W., & Song, J. (2016). Debt Relief or Debt Restructuring? Evidence from an Experiment with Distressed Credit Card Borrowers. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01s1784p200 (Original work published 08/2016AD)
Working Papers
Abstract

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.

Year of Publication
2016
Number
605
Date Published
09/2016
Publication Language
eng
Citation Key
9811
Dobbie, W., Song, J., Goldsmith-Pinkham, P., & Mahoney, N. (2016). Bad Credit, No Problem? Credit and Labor Market Consequences of Bad Credit Reports. Retrieved from http://arks.princeton.edu/ark:/88435/dsp019593tx61n (Original work published 09/2016AD)
Working Papers
Abstract

We use a massive, matched employer-employee database for the United States to analyze the contribution of firms to the rise in earnings inequality from 1978 to 2013. We find that one-third of the rise in the variance of (log) earnings occurred within firms, whereas two-thirds of the rise occurred between firms. However, this rising between-firm variance is not accounted for by the firms themselves: the firm-related rise in the variance can be decomposed into two roughly equally important forces -- a rise in the sorting of high-wage workers to high-wage firms and a rise in the segregation of similar workers between firms. In contrast, we do not find a rise in the variance of firm-specific pay once we control for worker composition. Instead, we see a substantial rise in dispersion of person-specific pay, accounting for 68% of rising inequality, potentially due to rising returns to skill. The rise in between-firm variance, mostly due to worker sorting and segregation, accounted for a particularly large share of the total increase in inequality in smaller and medium firms (explaining 84% for firms with fewer than 10,000 employees). In contrast, in the very largest firms with 10,000+ employees, 42% of the increase in the variance of earnings took place within firms, driven by both declines in earnings for employees below the median and a substantial rise in earnings for the 10% best-paid employees. However, because of their small number, the contribution of the very top 50 or so earners at large firms to the
overall increase in within-firm earnings inequality is small.

Year of Publication
2018
Number
618
Date Published
04/2018
Publication Language
eng
Citation Key
10501
Von Wachter, T., Song, J., Price, D., Guvenen, F., & Bloom, N. (2018). Firming Up Inequality. Retrieved from http://arks.princeton.edu/ark:/88435/dsp01p2676z23z (Original work published 04/2018AD)
Working Papers