Households’ debt levels have an important bearing on their willingness to participate in the labour market, a working paper published by the Bank of England finds.

Philip Bunn and co-authors note that survey data from the UK suggests households view working longer hours as a possible “margin of adjustment” to cope with debt constraints.

The authors develop a theoretical framework with three types of household: “outright” homeowners with no debt; mortgagors who own houses; and renters, who