Unemployment and Household Debt - A Practical Example

Sammanfattning: In the previous literature, a theoretical correlation has been established in between household indebtedness and the unemployment rate. This study uses several forms of regressions and OECD data on the years 1995 - 2021 to see if this correlation exists in practice. After accounting for fixed effects, the correlation is deemed to be positive, thus reinforcing the previous literature. Further research is needed to find causal factors, possible reasons for which can be consumption reduction due to high debt obligations, decreased investment in human capital and diminished workers' bargaining power.