Wage Garnishment and Eviction Risk: Evidence from Franklin County Municipal Court Records

• In Event: From Credit Access to Debt Enforcement: Financial Vulnerability Across Systems

Abstract

Wage garnishment is a legal mechanism through which employers withhold a portion of workers’ earnings to repay debts before income is received. As a core enforcement tool in the U.S. consumer credit system, garnishment sustains credit markets by enabling creditors to recover losses and extend credit to higher-risk borrowers (Fulford & Nagypál, 2025). At the same time, it directly reduces take-home pay, creating a fundamental tension between credit market efficiency and household financial stability. Despite its prevalence—affecting nearly 1% of U.S. workers monthly and reducing earnings by roughly 11% over episodes lasting about five months—garnishment remains understudied, particularly in its downstream effects on household well-being (DeFusco et al., 2023; USDA).

This project examines whether and how wage garnishment contributes to housing instability. Specifically, we ask: (1) Are garnished consumers more likely to experience eviction than otherwise similar non-garnished consumers? and (2) Are eviction outcomes sensitive to the intensity of garnishment, measured by the size of monthly payments and the rate of debt repayment through garnishment? Garnishment functions as a negative income shock that tightens household budget constraints. Households may respond by reducing consumption, delaying payments, or increasing borrowing; because housing costs are relatively inflexible, reduced liquidity may increase eviction risk. These effects are likely to scale with the size of required payments and the pace of debt repayment.

To identify causal effects, we use administrative data from the Franklin County Municipal Court (2014–2025), linked to neighborhood-level census block characteristics, and implement an instrumental variables design that exploits random assignment of judges to civil cases and quasi-random variation in judges’ propensity to order wage garnishment. Among otherwise similar cases, individuals are differentially exposed to judges who vary in their likelihood of imposing garnishment and in the magnitude of payments required. We use this variation to instrument for both the incidence and size of garnishment payments, isolating exogenous differences in reductions to take-home pay. The identifying assumption is that, conditional on case and neighborhood characteristics, judge assignment affects eviction outcomes only through its impact on garnishment decisions.

This study provides new evidence on the housing consequences of debt enforcement. By quantifying how eviction risk responds to both the presence and magnitude of wage garnishment, the findings inform policy debates on garnishment limits and income protections. If eviction risk is sensitive to these parameters, reforms that reduce required payment burdens or increase protected income thresholds may mitigate unintended spillovers to housing instability while preserving the functioning of consumer credit markets.

Author

• Rebecca F Xie, The Ohio State University
  Presenting Author