Keeping Up With the Novaks? Income Distribution as a Determinant of Household Debt in CESEE

Hake, Mariya and Poyntner, Philipp (2021) Keeping Up With the Novaks? Income Distribution as a Determinant of Household Debt in CESEE. Review of Income and Wealth. ISSN 0034-6586

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Abstract

This paper constitutes an initial attempt to shed light on the role of income distribution for household debt in Central, Eastern, and Southeastern Europe (CESEE). Using household-level data from the OeNB’s Euro Survey for the period 2008–2018, we address the question whether interpersonal comparisons (“Keeping up with the Novaks”) are associated with the probability of having a loan and planning to take out a loan. Applying multilevel probit modeling to consider the hierarchical structure of the data, our results support the notion that higher income inequality is negatively correlated with the probability of having a loan at the bottom of the distribution, and positively at the top. We show this impact for almost all components of household debt, but evidence is strongest for mortgage and foreign currency loans. Loan plans are associated with income inequality at the very top of the income distribution.

Item Type:	Article
Additional Information:	Early View - online Version of Record before inclusion in an issue
Keywords:	Keywords: CESEE, household loans, income distribution, multilevel models, relative income
Classification Codes:	JEL Codes: D1, D3, G5
Version of the Document:	Published
Depositing User:	ePub Administrator
Date Deposited:	03 Nov 2021 11:01
Last Modified:	03 Nov 2021 11:01
Related URLs:	Publisher
URI:	https://epub.wu.ac.at/id/eprint/8383

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