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The wealth of Spanish households: a microeconomic comparison with the United States, Italy and the United Kingdom

Author

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  • Olympia Bover
  • Carmen Martínez-Carrascal
  • Pilar Velilla

Abstract

The financial situation of households in Spain has changed significantly over the last few years. Particularly noteworthy is the upsurge in household debt relative to their gross available income which, by the end of 2004, had more than doubled since the middle of the previous decade. This increase in indebtedness has, nevertheless, been accompanied by a rise in household wealth – both financial and, more especially, housing-related – stemming from the increase in house prices and from high residential investment. However, for a more precise assessment of the wealth position of Spanish households, it is necessary to carry out a more detailed analysis. Indeed, the analysis of differences in indebtedness or in the composition of wealth, according to income or age, will be important for drawing conclusions on aspects relating to macroeconomic and financial stability in the Spanish economy, such as possible sector vulnerability to unfavourable developments in financing costs, asset prices or incomes. The recent Spanish Survey on Household Finances (EFF) conducted by the Banco de España offers the possibility to analyse these issues. This article analyses the financial situation of Spanish households through comparisons with other countries, with a view to identifying both common and distinctive characteristics of the financial position of households in Spain. More specifically, the analysis compares Spain with the United States, Italy and the United Kingdom, where the detailed data needed to construct the variables needed in this analysis are readily available. The comparisons drawn with the United States and the United Kingdom are of particular relevance, since the position of households in these two countries, particularly on account of their high ratios of indebtedness, is considered to be one of the determining factors in the countries’ macroeconomic prospects. In addition to this introduction, the article has six sections and one annex. The first describes the databases used, a more detailed description of which is given in the annex. Next follows an analysis of the distribution of net household wealth and income in the countries under review. The following section analyses the ownership and composition of household assets and liabilities for all households and for different population sub-groups, defined according to income level and age. In the case of indebted households, ratios that measure the magnitude of the debt contracted in relation to household income and wealth are also given. Finally, the last section sets out the main conclusions.

Suggested Citation

  • Olympia Bover & Carmen Martínez-Carrascal & Pilar Velilla, 2005. "The wealth of Spanish households: a microeconomic comparison with the United States, Italy and the United Kingdom," Economic Bulletin, Banco de España, issue JUL, pages 87-109, July.
  • Handle: RePEc:bde:journl:y:2005:i:7:n:3
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    Citations

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    Cited by:

    1. José Mª Durán Cabré & Alejandro Esteller Moré, 2007. "An empirical analysis of wealth taxation: Equity Vs.tax compliance," Working Papers XREAP2007-03, Xarxa de Referència en Economia Aplicada (XREAP), revised Jun 2007.
    2. Mayssun El-Attar & Markus Poschke, 2011. "Trust and the Choice Between Housing and Financial Assets: Evidence from Spanish Households," Review of Finance, European Finance Association, vol. 15(4), pages 727-756.
    3. Olympia Bover, 2010. "Wealth Inequality And Household Structure: U.S. Vs. Spain," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(2), pages 259-290, June.
    4. Gómez-Salvador, Ramón & Westermann, Thomas & Lojschová, Adriana, 2011. "Household sector borrowing in the euro area - a micro data perspective," Occasional Paper Series 125, European Central Bank.
    5. José Mª Durán Cabré & Alejandro Esteller Moré, 2007. "An empirical analysis of wealth taxation: Equity Vs.tax compliance," Working Papers XREAP2007-03, Xarxa de Referència en Economia Aplicada (XREAP), revised Jun 2007.
    6. Olympia Bover, 2010. "Housing purchases and the dynamics of housing wealth," Working Papers 1036, Banco de España.
    7. Ada Ferrer-i-carbonell & X. Ramos & M. Oviedo, 2013. "GINI Country Report: Growing Inequalities and their Impacts in Spain," GINI Country Reports spain, AIAS, Amsterdam Institute for Advanced Labour Studies.
    8. Fessler, Pirmin & Lindner, Peter & Segalla, Esther, 2014. "Net wealth across the euro area - why household structure matters and how to control for it," Working Paper Series 1663, European Central Bank.
    9. Francisco Azpitarte, 2010. "Measuring poverty using both income and wealth: A cross-country comparison between the U.S. and Spain," Working Papers 153, ECINEQ, Society for the Study of Economic Inequality.
    10. Francisco Azpitarte, 2010. "The household wealth distribution in Spain: The role of housing and financial wealth," Hacienda Pública Española / Review of Public Economics, IEF, vol. 194(3), pages 65-90, October.
    11. Francisco Azpitarte, 2008. "The Household Wealth Distribution in Spain: The Role of Housing and Financial Wealth," Working Papers 83, ECINEQ, Society for the Study of Economic Inequality.
    12. José Ma Durán‐Cabré & Alejandro Esteller‐Moré, 2010. "Tax Data For Wealth Concentration Analysis: An Application To Spanish Wealth Tax," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(3), pages 620-631, September.
    13. Cristina Barceló, 2008. "The impact of alternative imputation methods on the measurement of income and wealth: Evidence from the Spanish survey of household finances," Working Papers 0829, Banco de España.
    14. Bover, Olympia, 2006. "Wealth Effects on Consumption: Microeconometric Estimates from a New Survey of Household Finances," CEPR Discussion Papers 5874, C.E.P.R. Discussion Papers.
    15. Francisco Azpitarte, 2008. "Measurement and Identification of Asset-Poor Households: A Cross-National Comparison of Spain and the United Kingdom," Working Papers 105, ECINEQ, Society for the Study of Economic Inequality.
    16. Arrondel, L. & Savignac, F., 2009. "Stockholding: Does housing wealth matter?," Working papers 266, Banque de France.

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