Labor Market and Household Debt in Asia Pacific Countries: Dynamic Heterogeneous Panel Data Analysis

Suhal Kusairi (), Suriyani Muhamad (), M Musdholifah () and Shu-Chen Chang ()
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Suhal Kusairi: Financial Economics, School of Social and Economic Development Universiti Malaysia Terengganu, Malaysia
Suriyani Muhamad: #x2020;Labour Economics, School of Social and Economic Development Universiti Malaysia Terengganu, Malaysia
M Musdholifah: #x2021;Department of Management, Faculty of Economics, State University of Surabaya, Indonesia
Shu-Chen Chang: #xA7;Department of Business Administration, National Formosa University, Yunlin, Taiwan

Journal of International Commerce, Economics and Policy (JICEP), 2019, vol. 10, issue 02, 1-15

Abstract: An overwhelming increase in household debt in the last decade has stirred researchers to explore the determinants of this phenomena, especially the role of the labor market. This paper comes to identify these determinants using the macro panel data from Asia Pacific countries for 1994–2016 and dynamic heterogeneous panel data analysis. The empirical results found that household consumption, housing price index, and labor force have a long-run positive relationship with household debt. In contrast, the unemployment rate and dependency ratio have a long-run negative relationship with household debt. This implies that when consumption, housing price, and labor force increase, then the household debt will increase, and when the unemployment rate and dependency ratio increase, the household debt will decrease. Also, in the short-run, public debt does affect private consumption, and it is not different among countries. The labor market, as represented by the unemployment rate, dependency ratio, and labor force, has a strong effect on the household debt in the long-run. Based on these findings, the government should pay more attention to the household debt related to property and commodity markets because they expose the short-run volatility and create problems for the long-term.

Keywords: Household debt; labor market; household consumption (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (4)

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DOI: 10.1142/S179399331950011X

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