Discussion Paper
Consumer Bankruptcy, Mortgage Default and Labor Supply
We specify and estimate a lifecycle model of consumption, housing demand and labor supply in
an environment where individuals may file for bankruptcy or default on their mortgage. Uncertainty
in the model is driven by house price shocks, education specific productivity shocks, and catastrophic
consumption events, while bankruptcy is governed by the basic institutional framework in the US as
implied by Chapter 7 and Chapter 13. The model is estimated using micro data on credit reports and
an environment where individuals may file for bankruptcy or default on their mortgage. Uncertainty
in the model is driven by house price shocks, education specific productivity shocks, and catastrophic
consumption events, while bankruptcy is governed by the basic institutional framework in the US as
implied by Chapter 7 and Chapter 13. The model is estimated using micro data on credit reports and