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Analysis of the Structural Changes in Household Debt Distributions by Householder Age in Korea and in the US

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  • Kim, Ji Seob

Abstract

This paper analyzes how and why household debt distribution by the householder age has changed over the past decade both in Korea and the US. Data shows that the proportion of household debt held by younger households has decreased, while that held by older households has increased. Empirical analysis shows that a change in the demographic distribution of householders is the main driving force that has shifted the household debt distribution. Given that demographic aging is an inevitable trend, the proportion of household debt held by older households is also expected to increase. Therefore, the Korean government must preemptively prepare for the household debt problem, especially for debt held by older households, by strengthening macro-prudential policies, preventing asset price deflation, restructuring household debt contract structures, and reforming labor market inflexibility.

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  • Kim, Ji Seob, 2015. "Analysis of the Structural Changes in Household Debt Distributions by Householder Age in Korea and in the US," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 37(4), pages 21-54.
    • Handle: RePEc:zbw:kdijep:v:37:y:2015:i:4:p:21-54
    DOI: 10.23895/kdijep.2015.37.4.21
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    1. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-1044, September.
    2. Young Il Kim & Joo Hee Yoo, 2013. "Assessing Korean Households' Credit Risk: Stress Tests with Household Level Data (in Korean)," Economic Analysis (Quarterly), Economic Research Institute, Bank of Korea, vol. 19(2), pages 59-95, June.
    3. Atif Mian & Amir Sufi, 2009. "The Consequences of Mortgage Credit Expansion: Evidence from the U.S. Mortgage Default Crisis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(4), pages 1449-1496.
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      More about this item

      Keywords

      Household debt distribution; Demographic distribution; Household income; Household asset;
      All these keywords.

      JEL classification:

      • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
      • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
      • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
      • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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