Does household indebtedness contribute to the decline of union density?

This paper argues that rising household indebtedness is associated with the decline of organised labour. Over the last decades, the financial system is increasingly financing working-class households, and recent research shows that indebted employees become more risk-averse at the workplace on the fear of losing their job and defaulting. Thus, since union formation or participation is commonly punished with redundancy, rising household indebtedness is likely to be associated with the aggregate reduction in unionisation. This study examines this argument for a high-, a mid-, and low-unionisation economy over the period 1965-2018: Sweden, Japan, and South Korea, respectively. Regression analysis provides robust support in favour of this argument. The results also suggest that financial regulation and social norms about personal insolvency matter for the size of the effects of household debt on unionisation.