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Household Debt and Marital Instability: Evidence from the Korean Labor and Income Panel Study

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  • Yunhee Chang

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  • Ki Lee

    ()

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    Abstract

    Korean society has recently experienced rapid increases in household debt and divorce rates. This study investigates whether household debt and debt ratios lower marital stability and increase the probability of divorce among Korean families. Six-year panels from the Korean Labor and Income Panel Study (KLIPS) household surveys were used for analysis. The effect of household debt upon the probability of divorce was estimated through pooled and population-averaged Logit models. The results suggest that household financial strain measured by the amount of household debt and the debt-to-income ratios does not significantly affect the probability of divorce. This finding contradicts the widespread notion that households’ excessive borrowing has been partially responsible for the recent increase in divorce rates in Korea. Copyright Springer Science+Business Media, Inc. 2006

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    File URL: http://hdl.handle.net/10.1007/s10834-006-9039-2
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    Bibliographic Info

    Article provided by Springer in its journal Journal of Family and Economic Issues.

    Volume (Year): 27 (2006)
    Issue (Month): 4 (December)
    Pages: 675-691

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    Handle: RePEc:kap:jfamec:v:27:y:2006:i:4:p:675-691

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    Web page: http://www.springerlink.com/link.asp?id=104904

    Related research

    Keywords: Divorce; Financial strain; Household debt; Korean families;

    References

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    1. Chiswick, Carmel U & Lehrer, Evelyn L, 1990. "On Marriage-Specific Human Capital: Its Role as a Determinant of Remarriage," Journal of Population Economics, Springer, vol. 3(3), pages 193-213, October.
    2. Jonathan Fisher & Angela Lyons, 2006. "Till Debt do us Part: A Model of Divorce and Personal Bankruptcy," Review of Economics of the Household, Springer, vol. 4(1), pages 35-52, 03.
    3. Weiss, Y., 1993. "The Formation and Dissolution of Families: Why Marry? Who Maries Whom? and what Happens Upon Divorce?," Papers 15-93, Tel Aviv.
    4. Johnson, William R & Skinner, Jonathan, 1986. "Labor Supply and Marital Separation," American Economic Review, American Economic Association, vol. 76(3), pages 455-69, June.
    5. Yoram Weiss & Robert J. Willis, . "Match Quality, New Information and Marital Dissolution," University of Chicago - Population Research Center 95-13, Chicago - Population Research Center.
    6. Elizabeth Monk-Turner & Charlie Turner, 2001. "Sex Differentials in Earnings in the South Korean Labor Market," Feminist Economics, Taylor & Francis Journals, vol. 7(1), pages 63-78.
    7. Luis Cubeddu & Jose-Victor Rios-Rull, 1997. "Marital risk and capital accumulation," Staff Report 235, Federal Reserve Bank of Minneapolis.
    8. Brenner, R & Dagenais, Marcel G & Montmarquette, C, 1994. "An Overlooked Explanation of the Declining Saving Rate," Empirical Economics, Springer, vol. 19(4), pages 629-37.
    9. Becker, Gary S & Landes, Elisabeth M & Michael, Robert T, 1977. "An Economic Analysis of Marital Instability," Journal of Political Economy, University of Chicago Press, vol. 85(6), pages 1141-87, December.
    10. Kerwin Kofi Charles & Melvin Stephens Jr., 2001. "Job Displacement, Disability, and Divorce," NBER Working Papers 8578, National Bureau of Economic Research, Inc.
    11. Gianni La Cava & John Simon, 2003. "A Tale of Two Surveys: Household Debt and Financial Constraints in Australia," RBA Research Discussion Papers rdp2003-08, Reserve Bank of Australia.
    12. Becker, Gary S, 1973. "A Theory of Marriage: Part I," Journal of Political Economy, University of Chicago Press, vol. 81(4), pages 813-46, July-Aug..
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    Cited by:
    1. Deborah Thorne, 2010. "Extreme Financial Strain: Emergent Chores, Gender Inequality and Emotional Distress," Journal of Family and Economic Issues, Springer, vol. 31(2), pages 185-197, June.
    2. Aydogan Ulker, 2008. "Wealth Holdings and Portfolio Allocation of the Elderly: The Role of Marital History," Economics Series 2008_16, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
    3. Jeffrey Dew, 2011. "The Association Between Consumer Debt and the Likelihood of Divorce," Journal of Family and Economic Issues, Springer, vol. 32(4), pages 554-565, December.

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