Credit and the Family : The Economic Consequences of Closing the Credit Gap of US Couples

Closing disparities in credit access between spouses can help reduce consumption inequality in the household. The 2013 reversal of the Truth-in-Lending Act increased the borrowing capacity of secondary earners in equitable-distribution states but not in community-property states, where division-of-property laws superseded the policy change. Using a matched difference-in-differences design and administrative financial-transaction records measuring the credit and consumption of each spouse, I show that this reversal increased secondary earners’ credit card limits by $1,025. In turn, spouses shared consumption more equally, closing their pre-reversal consumption gap by 10 percent. Household spending shifted toward goods that benefit both spouses. Delinquency rates were not measurably impacted, suggesting that household financial standing did not worsen. These results are consistent with a model of joint decision-making under limited commitment, in which credit causes a shift in marital bargaining power