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The changing distribution of wealth in the pre-crisis US and UK: the role of socio-economic factors

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  • Frank Cowell
  • Eleni Karagiannaki
  • Abigail McKnight

Abstract

The USA and the UK experienced substantial increases in net wealth in the decade that preceded the financial crisis, largely driven by house-price booms in each country. The distribution of these gains across households led to a slight increase in wealth inequality in the USA but a substantial fall in inequality in the UK. We use a decomposition technique to examine the extent to which changes in households’ socioeconomic characteristics explain changes in wealth holdings and wealth inequality. In both countries we find that changes in household characteristics had an equalizing effect on wealth inequality, moderating the increase in the USA and accounting for over one-third of the fall in UK wealth inequality.

Suggested Citation

  • Frank Cowell & Eleni Karagiannaki & Abigail McKnight, 2019. "The changing distribution of wealth in the pre-crisis US and UK: the role of socio-economic factors," Oxford Economic Papers, Oxford University Press, vol. 71(1), pages 1-24.
    • Handle: RePEc:oup:oxecpp:v:71:y:2019:i:1:p:1-24.
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    Cited by:

    1. Juan C. Palomino & Gustavo A. Marrero & Brian Nolan & Juan G. Rodriguez, 2020. "Wealth inequality, intergenerational transfers and socioeconomic background," Working Papers 537, ECINEQ, Society for the Study of Economic Inequality.
    2. Juan C Palomino & Gustavo A Marrero & Brian Nolan & Juan G Rodríguez, 2022. "Wealth inequality, intergenerational transfers, and family background [Intergenerational wealth mobility and the role of inheritance: Evidence from multiple generations]," Oxford Economic Papers, Oxford University Press, vol. 74(3), pages 643-670.
    3. Duque, Magali & Mcknight, Abigail, 2019. "Understanding the relationship between inequalities and poverty: mechanisms associated with crime, the legal system and punitive sanctions," LSE Research Online Documents on Economics 103459, London School of Economics and Political Science, LSE Library.
    4. Magali Duque & Abigail McKnight, 2019. "Understanding the relationship between inequalities and poverty: mechanisms associated with crime, the legal system and punitive sanctions," CASE Papers /215, Centre for Analysis of Social Exclusion, LSE.

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    More about this item

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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