Household Debt Overhang and Labor Supply

Higher household debt has been associated with lower future GDP growth across a broad set of 80 countries over the period from 1950 to 2016. Several institutional factors, such as flexible exchange rates, capital account openness, and higher financial development and inclusion, appear to mitigate this negative relationship between an increase in household debt and lower future GDP growth. Three mutually reinforcing mechanisms help explain this relationship. First, increases in household debt amplify the probability of future banking crises which significantly disrupt financial intermediation. Second, crash risk may be systematically neglected due to investors’ overoptimistic expectations associated with household debt booms. Third, debt overhang impairs household consumption when negative shocks hit.

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Does Household Debt Influence the Labor Supply and Benefit Claiming Decisions of Older Americans?

SSRN Electronic Journal ◽

10.2139/ssrn.2574724 ◽

2014 ◽

Cited By ~ 1

Author(s):

Barbara A. Butrica ◽

Nadia S. Karamcheva

Keyword(s):

Labor Supply ◽

Household Debt ◽

Older Americans

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The Role of Television in Household Debt: Evidence from the 1950's

The B E Journal of Economic Analysis & Policy ◽

10.2202/1935-1682.2393 ◽

2010 ◽

Vol 10 (1) ◽

Cited By ~ 4

Author(s):

Matthew J. Baker ◽

Lisa M George

Keyword(s):

Labor Supply ◽

Durable Goods ◽

Television Advertising ◽

Household Debt ◽

Micro Data ◽

Survey Of Consumer Finances ◽

Mortgage Debt ◽

Consumer Finances ◽

Early Access

Abstract We examine whether advertising increases household debt by studying the initial expansion of television in the 1950's. Exploiting the idiosyncratic spread of television across markets, we use micro data from the Survey of Consumer Finances to test whether households with early access to television saw steeper debt increases than households with delayed access. Results indicate that exposure to television advertising increases the tendency to borrow for household goods and the tendency to carry debt. Television access is associated with higher debt levels for durable goods, but not with the total amount of non-mortgage debt. We provide suggestive evidence that increased labor supply may drive our results. The role of media in household debt may be greater than suggested by existing research.

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