How Does Bankruptcy Law Impact the Elderly' s Business and Housing Decisions?

TitleHow Does Bankruptcy Law Impact the Elderly' s Business and Housing Decisions?
Publication TypeJournal Article
Year of Publication2013
AuthorsGreenhalgh-Stanley, N, Rohlin, S
JournalThe Journal of Law and Economics
KeywordsHousing, Net Worth and Asset, Net Worth and Assets, Public Policy, Retirement Planning and Satisfaction

The elderly are the population most likely to file for bankruptcy, with filings increasing by 150 percent from 1991 to 2007. This is likely because they live with relatively flat incomes and high medical expenses, and their retirement and housing assets are typically exempt from bankruptcy filings. In addition, nine states adopted higher asset exemptions specifically for the elderly. Using the Health and Retirement Study and recent state-by-time variation in homestead exemptions, we are the first to test whether the benefits of partial wealth insurance or the cost of supply-side credit constraints are predominant for the elderly. Using pooled cross-sectional analysis, we find that an increase in a state' s homestead exemption increases the elderly' s home equity and business ownership; however, the credit constraint is dominant in unlimited-exemption states, which decreases home and business ownership. Panel analysis reveals that an increase in the homestead exemption positively affects home ownership rates and home equity.

Endnote Keywords

home equity/bankruptcy/Retirees/retirement planning/homestead exemption/Public Policy/assets/Housing

Endnote ID


Citation Key7837