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

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. 2006Divorce, Financial strain, Household debt, Korean families,

Pathways from economic hardship to couple conflict by socioeconomic status during COVID‐19 in Korea

“…This nonsignificant direct association is similar to previous research, which has failed to find a direct link between debt and family dynamics (Chang & Lee, 2006). Although the higher SES group was not free from the sequential indirect effect of increased debt through elevated economic strain and perceived stress, greater borrowing was not a direct threat in this group because debt may have been related to accumulated assets such as a home and stocks or better cash flow in higher SES households (Chang & Lee, 2006;J. M. Park et al, 2017).…”

“…This nonsignificant direct association is similar to previous research, which has failed to find a direct link between debt and family dynamics (Chang & Lee, 2006 ). Although the higher SES group was not free from the sequential indirect effect of increased debt through elevated economic strain and perceived stress, greater borrowing was not a direct threat in this group because debt may have been related to accumulated assets such as a home and stocks or better cash flow in higher SES households (Chang & Lee, 2006 ; J. M. Park et al, 2017 ). This finding was unlike the lower SES group whose debt was more related to survival during a crushed economy.…”

“…Based on the FSM, Dew ( 2007 ) found both direct and indirect effects of consumer debt and marital conflict using a U.S. sample. However, in a Korean study, neither the amount of household debt nor the debt‐to‐income ratio had a relationship with marital instability (Chang & Lee, 2006 ). Among Portuguese couples, the indirect effect of family debt on family functioning and psychological well‐being was negative through economic pressure, but the direct effect of debt was positive (Fonseca et al, 2021 ).…”

“…Among Portuguese couples, the indirect effect of family debt on family functioning and psychological well‐being was negative through economic pressure, but the direct effect of debt was positive (Fonseca et al, 2021 ). These mixed results imply that the amount or proportion of debt may not be an ideal marker of economic hardship because the impact of debt on couples may vary based on the types of debt and the reasons for borrowing (Chang & Lee, 2006 ; Dew, 2007 ). Thus, if detailed information on debt is not available, an increase in household debt may be an adequate variable reflecting economic hardship during COVID‐19 because additional borrowing may indicate economic disruptions during an economic downturn.…”

Debt types and burdens by family structures

“…Research indicates that short-term debts may have an adverse influence on psychological well-being, particularly for those who are less educated, approaching retirement age, or single (Berger et al, 2016). Debt may affect the quality of marriages, although the evidence is mixed (Chang and Lee, 2006;Dew, 2007Dew, , 2008.…”