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Household mortgage debt unleashed devastating consequences for the global economy in 2007-2008.  Yet, despite the growing importance of household debt in financial markets, international and comparative political economy scholars have not theorized why it varies so much across Europe. Aidan’s paper argues that variation in household debt can be explained by the intersection of two domestic institutions: labour market institutions (and by extension the welfare state) that enable households to withstand negative employment/income shocks, and mortgage finance institutions that govern households’ credit access.  The paper empirically demonstrates via a panel analysis of 17 advanced capitalist democracies that the impact of these institutions on household debt is co-dependent.  Strong collective bargaining institutions (and generous welfare states), which protect borrowers from income and employment insecurity, are associated with higher household indebtedness, but only if housing finance institutions that encourage mortgage lending are present (i.e. in Scandinavian social democracies). In contrast, liberal market (financialized) economies have comparatively lower household indebtedness because their labour market institutions inhibit income security for borrowers.  The findings suggest that the conditions for a property owning middle class - a defining feature of contemporary capitalism - is increasing dependent on both wage growth and rising household debt accumulation. 

Aidan Regan is an Associate Professor at the School of Politics and International Relations at University College Dublin (UCD), and Director of UCD’s Jean Monnet Centre of Excellence in European political economy. Aidan was previously a postdoctoral fellow at the Max Planck Institute for the Study of Societies in Germany (MPIfG), and a Max Weber Fellow at the European University Institute (EUI) in Italy. Aidan’s research is focused on comparative and international political economy, European integration, taxation, industrial relations, welfare states and housing. His research has appeared in various political and social scientific journals including West European Politics, Perspectives on Politics, Politics and Society, New Political Economy, the Journal for Common Market Studies, European Journal of Industrial Relations, Comparative European Politics, and Socio-Economic Review, among other outlets. You can follow him on Twitter at @aidan_regan

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