Publication
The Korean Economic Forum
Analysis of Household Debt Vulnerability by Age Groups: South Korea vs. Europe
Julie Kim (Yonsei University), Jiseob Kim (Yonsei University) and Yunho Cho (The Institute for Economic and Social Research, Jinan University)Year 2024Vol. 17No. 1
Abstract
This study examines the debt vulnerability of Korean households across age
groups and compares it with eight European countries. Using data from the
2012-2022 Survey of Household Finances and Living Conditions (SHFLC) and
the Household Finance and Consumer Survey (HFCS, waves 1-4), we observe
that elderly households (aged 60+) in Korea exhibit higher shares and average
values of household debt compared to their counterparts in European countries.
Our analyis of multiple debt vulnerability indicators reveals that elderly
households in Korea face financial constraints related to liquidity. Moreover,
with a higher proportion of adjustable-rate mortgages and lower income stability
in comparison to European countries, Korean elderly households are more
susceptible to adverse macro-finance aggregate shocks. These findings
underscore the importance for policymakers in Korea to consider age-specific
financial conditions when devising household debt policies and emphasize the
need to enhance liquidity and income stability for elderly households.