THESIS
2023
1 online resource (xii, 116 pages) : illustrations (some color)
Abstract
This dissertation studies the role of credit access in improving individual welfare in the
economy with labor market frictions. Using a unique setting in Korea, it uses a regression
discontinuity design to show the impact of credit access on medical and occupational
outcomes.
I find that access to credit can make a life-or-death difference to the poor even when
medical treatment is affordable. The poor often delay seeking medical treatment even if
they don’t need to pay the medical fee, to avoid losing income due to missed workdays. I
find that access to credit can remedy this issue by making it possible for individuals to take
time off from work to seek medical care. Individuals with better credit access utilize more
medical services and seek treatment more promptly leading to early di...[
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This dissertation studies the role of credit access in improving individual welfare in the
economy with labor market frictions. Using a unique setting in Korea, it uses a regression
discontinuity design to show the impact of credit access on medical and occupational
outcomes.
I find that access to credit can make a life-or-death difference to the poor even when
medical treatment is affordable. The poor often delay seeking medical treatment even if
they don’t need to pay the medical fee, to avoid losing income due to missed workdays. I
find that access to credit can remedy this issue by making it possible for individuals to take
time off from work to seek medical care. Individuals with better credit access utilize more
medical services and seek treatment more promptly leading to early diagnoses, timely treatments, and ongoing medical attention. These results are critical, as they suggest that
credit access can reduce mortality rate by as much as 70%.
Access to credit can also improve labor mobility. The results show that individuals with
better credit access were 33.7 percent more likely to switch jobs compared to the otherwise
similar individuals. The higher switching rates and subsequent wage improvements in
response to credit availability suggest that credit frictions impede labor mobility. The
results also show that individuals with credit access are more likely to switch to employers
in a different industry and move to other occupations, consistent with credit availability
increasing the propensity to take greater risks in changing employers.
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