Who Is Screened Out of Social Insurance Programs by Entry Barriers? Evidence from Consumer Bankruptcies

Slava Mikhed &
Barry Scholnick

October 2015

WP 15-40 — Entry barriers into social insurance programs will be effective screening devices if they cause only those individuals receiving higher benefits from a program to participate in that program.

Supersedes Working Paper 14-18 — Financial Benefits, Travel Costs, and Bankruptcy.

We find evidence for this by using plausibly exogenous variations in travel-related entry costs into the Canadian consumer bankruptcy system. Using detailed balance sheet and travel data, we find that higher travel-related entry costs reduce bankruptcies from individuals with lower financial benefits of bankruptcy (unsecured debt discharged, minus secured assets forgone). When compared across filers, each extra kilometer traveled to access the bankruptcy system requires approximately $11 more in financial benefits from bankruptcy.

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