Income Inequality and Rising Household Debt - Evidence from Sweden
(2016) NEKH02 20161Department of Economics
- Abstract
- The purpose of this thesis is to examines the relationship between income inequality and level of indebtedness among the Swedish population. Using a relative consumption theory framework, the effect of income inequality on debt ratio and propensity to acquire debt above one’s ability is analyzed. Further, the sample is divided into two subgroupings to check if the effect is more profound in urban than rural areas. This is done through a cross-sectional analysis using municipality level data from 2014. The empirical findings support that income inequality has a strong positive effect on debt ratio as well as the notion of acquiring debt above one’s ability. The findings do not support a greater effect in urban areas, rather implying that... (More)
- The purpose of this thesis is to examines the relationship between income inequality and level of indebtedness among the Swedish population. Using a relative consumption theory framework, the effect of income inequality on debt ratio and propensity to acquire debt above one’s ability is analyzed. Further, the sample is divided into two subgroupings to check if the effect is more profound in urban than rural areas. This is done through a cross-sectional analysis using municipality level data from 2014. The empirical findings support that income inequality has a strong positive effect on debt ratio as well as the notion of acquiring debt above one’s ability. The findings do not support a greater effect in urban areas, rather implying that the effect is greater in rural areas. Based on these findings, income inequality have undesirable effects and policies, such as taxation of luxury goods and a more progressive taxation system, can act to mitigate income inequality in the society. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/8882961
- author
- Abrahamson, Måns LU and Borgstrand, Freja LU
- supervisor
- organization
- course
- NEKH02 20161
- year
- 2016
- type
- M2 - Bachelor Degree
- subject
- keywords
- Income inequality, Gini, Debt, Relative consumption theory
- language
- English
- id
- 8882961
- date added to LUP
- 2016-06-22 12:28:39
- date last changed
- 2016-06-22 12:28:39
@misc{8882961, abstract = {{The purpose of this thesis is to examines the relationship between income inequality and level of indebtedness among the Swedish population. Using a relative consumption theory framework, the effect of income inequality on debt ratio and propensity to acquire debt above one’s ability is analyzed. Further, the sample is divided into two subgroupings to check if the effect is more profound in urban than rural areas. This is done through a cross-sectional analysis using municipality level data from 2014. The empirical findings support that income inequality has a strong positive effect on debt ratio as well as the notion of acquiring debt above one’s ability. The findings do not support a greater effect in urban areas, rather implying that the effect is greater in rural areas. Based on these findings, income inequality have undesirable effects and policies, such as taxation of luxury goods and a more progressive taxation system, can act to mitigate income inequality in the society.}}, author = {{Abrahamson, Måns and Borgstrand, Freja}}, language = {{eng}}, note = {{Student Paper}}, title = {{Income Inequality and Rising Household Debt - Evidence from Sweden}}, year = {{2016}}, }