Working Papers
California Wildfires, Property Damage, and Mortgage Repayment
with Mallick Hossain and David Zink
FRB Philadelphia Working Paper 23-05
Abstract: This paper examines the impact of wildfires on mortgage repayment using novel data that combine property-level damages and mortgage performance. We find that 90-day delinquencies were 4 percentage points higher and prepayments were 16 percentage points higher for properties that were damaged by wildfires compared to properties 1 to 2 miles outside of the wildfire perimeter, which suggests higher risks to mortgage markets than found in previous studies. We find no significant changes in delinquency or prepayment for undamaged properties inside a wildfire boundary. Prepayments are not driven by increased sales or refinances, suggesting insurance claims drive prepayment. Almost 40 percent of affected households receive insurance settlements lower than the estimated replacement costs that define coverage limits. This underpayment and the resulting deficits imply that households receive about $200,000 to $300,000 less than their entitled amount under California law.
Presentations (* by coauthor): Richmond Fed Climate Jamboree*, FDIC Interagency Risk Quantification Forum*, Philadelphia Fed Consumer Finance Institute*, Eastern Economic Association, AREUEA Virtual Seminar, AREUEA National Conference, OCC Economic Symposium*, WEAI, CFPB*Federal Student Loans, College Choice, and Student Welfare
Abstract: I examine the role of federal loans on access to higher education and student welfare by modeling students’ postsecondary investments in human capital. I develop a dynamic discrete choice model of a student’s decision to apply to college, to enroll in a college in which she is admitted, and to finance education, either by borrowing or working, in the presence of borrowing constraints. I estimate the structural parameters of this forward-looking decision process using data from two cohorts of students who enter college before and after a rare increase to federal loan limits in 2007 and 2008. Counterfactual policy analysis shows that raising loan limits increases enrollment, specifically towards four-year non-elite colleges, and improves persistence of enrollment. Partial and full college subsidies encourage enrollment, but sorting between community colleges and four-year colleges by income may not reduce existing gaps in the quality of college attended. Relative to free college, increasing borrowing limits provides 50 percent of the average welfare gains and more than 94 percent of the welfare gains for high-ability students at a fraction of the policy cost. However, welfare gains from raising loan limits are concentrated among high-ability students and accounting for college pricing responses reduces welfare gains non-trivially.
Presentations: Association for Education Finance & Policy, AEA/ASSA, Society of Labor Economists
Publications
The COVID-19 Pandemic and Mental Health of First-Year College Students: Examining the Effect of COVID-19 Stressors Using Longitudinal Data
with Jane Cooley Fruehwirth and Krista Perreira
PLoS One, March 2021, 16(3): e0247999
Article PDF. Featured on WRAL, The Well, The Daily Tar Heel, Scienmag, MedicalXpress, EurekaAlertBubbly Recessions
with Andrew Hanson and Toan Phan
American Economic Journal: Macroeconomics, October 2020, 12(4): 33-70.
Article PDF and Richmond Fed Economic BriefIncome Inequality, Tax Policy, and Economic Growth
with Indraneel Chakraborty and Rong Hai
Economic Journal, May 2017, 127(601): 688-727.
Article PDF. Featured on SiriusXM Business Radio