Household debt and labour supply

Philip Bunn (), Jagjit Chadha, Thomas Lazarowicz (), Stephen Millard and Emma Rockall ()
Additional contact information
Philip Bunn: Bank of England, Postal: Bank of England, Threadneedle Street, London, EC2R 8AH
Thomas Lazarowicz: University College London
Emma Rockall: Stanford University

No 941, Bank of England working papers from Bank of England

Abstract: In this paper, we first develop a theoretical framework with three types of household: outright homeowners, mortgagors and renters. We then examine empirically how household debt affects the response of labour supply to shocks to income, mortgage interest rates and house prices for each type of household. In line with our framework, we find that negative income shocks lead to lower participation among outright homeowners while increasing mortgagors’ desired hours; surprise rises in interest rates lead to increases in desired hours that are larger the higher is the household’s debt level; and falls in house prices increase mortgagors’ desired hours.

Keywords: Household debt; housing; labour supply; participation; hours worked (search for similar items in EconPapers)
JEL-codes: E21 J22 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2021-09-24
New Economics Papers: this item is included in nep-eur, nep-lma, nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:0941

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