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The Wealth Inequality of Nations

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  • Pfeffer, Fabian T.

    (University of Michigan)

  • Waitkus, Nora

Abstract

Comparative research on income inequality has produced several coherent frameworks to study the institutional determinants of income stratification. In contrast, no such framework and much less empirical evidence exist to explain cross-national differences in wealth inequality. This situation is particularly lamentable as cross-national patterns of inequality in wealth diverge sharply from those in income. We seek to pave the way for new explanations of cross-national differences in wealth inequality by tracing them to the influence of different wealth components. Drawing on the literatures on financialization and housing, we argue that housing equity should be the central building block of the comparative analysis of wealth inequality. Using harmonized data on fifteen countries included in the Luxembourg Wealth Study (LWS), we first demonstrate a lack of association between national levels of income and wealth inequality and concentration. Using decomposition approaches, we then estimate the degree to which national levels of wealth inequality and concentration relate to cross-national differences in wealth portfolios and the distribution of specific asset components. Considering the role of housing equity, financial assets, non-housing real assets, and non-housing debt, we reveal that cross-national variation in wealth inequality and concentration is centrally determined by the distribution of housing equity. (Stone Center on Socio-Economic Inequality Working Paper)

Suggested Citation

  • Pfeffer, Fabian T. & Waitkus, Nora, 2021. "The Wealth Inequality of Nations," SocArXiv 6msuf, Center for Open Science.
  • Handle: RePEc:osf:socarx:6msuf
    DOI: 10.31219/osf.io/6msuf
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    References listed on IDEAS

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    1. Emmanuel Saez & Gabriel Zucman, 2020. "The Rise of Income and Wealth Inequality in America: Evidence from Distributional Macroeconomic Accounts," Journal of Economic Perspectives, American Economic Association, vol. 34(4), pages 3-26, Fall.
    2. Maryse Fesseau & Florence Wolff & Maria Liviana Mattonetti, 2013. "A Cross-country Comparison of Household Income, Consumption and Wealth between Micro Sources and National Accounts Aggregates," OECD Statistics Working Papers 2013/3, OECD Publishing.
    3. Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2018. "Distributional National Accounts: Methods and Estimates for the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(2), pages 553-609.
    4. Facundo Alvaredo & Lucas Chancel & Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2017. "Global Inequality Dynamics: New Findings from WID.world," American Economic Review, American Economic Association, vol. 107(5), pages 404-409, May.
    5. Pfeffer, Fabian T. & Waitkus, Nora, 2021. "Comparing child wealth inequality across countries," LSE Research Online Documents on Economics 112761, London School of Economics and Political Science, LSE Library.
    6. Pfeffer, Fabian T. & Schoeni, Robert F. & Kennickell, Arthur & Andreski, Patricia, 2016. "Measuring wealth and wealth inequality: Comparing two U.S. surveys," Journal of Economic and Social Measurement, IOS Press, issue 2, pages 103-120.
    7. Emmanuel Saez & Gabriel Zucman, 2016. "Editor's Choice Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(2), pages 519-578.
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    Cited by:

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    2. Kanabar, Ricky & Gregg, Paul, 2022. "Intergenerational wealth transmission and mobility in Great Britain: what components of wealth matter?," ISER Working Paper Series 2022-02, Institute for Social and Economic Research.
    3. Xueying Mu & Can Cui & Wei Xu, 2024. "Stagnation or upward mobility? The influence of achieved and ascribed factors on the housing careers of residents in Shanghai," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-13, December.
    4. Natalia Zdanowska, 2023. "Socio-spatial Inequalities in a Context of "Great Economic Wealth". Case study of neighbourhoods of Luxembourg City," Papers 2307.09251, arXiv.org.
    5. Zilja, Flladina & Benito, Gabriel R.G. & Boustanifar, Hamid & Zhang, Dan, 2023. "CEO wealth and cross-border acquisitions by SMEs," International Business Review, Elsevier, vol. 32(6).
    6. Brzezinski, Michal & Sałach, Katarzyna, 2021. "Factors that account for the wealth inequality differences between post-socialist countries," Economic Modelling, Elsevier, vol. 105(C).
    7. Philipp M. Lersch & Emanuela Struffolino & Agnese Vitali, 2022. "Wealth in Couples: Introduction to the Special Issue," European Journal of Population, Springer;European Association for Population Studies, vol. 38(4), pages 623-641, October.
    8. Kuypers, Sarah & Figari, Francesco & Verbist, Gerlinde, 2024. "Vertical and horizontal equity of wealth taxes: An assessment from a joint income-wealth perspective," Economics Letters, Elsevier, vol. 234(C).
    9. Carranza, Rafael & De Rosa, Mauricio & Flores, Ignacio, 2023. "Wealth inequality in Latin America," LSE Research Online Documents on Economics 119426, London School of Economics and Political Science, LSE Library.
    10. Meriläinen, Marjut & Karhula, Aleksi & Kurvinen, Antti & Falkenbach, Heidi & Ala-Mantila, Sanna, 2024. "Transit-induced socioeconomic ascent and new metro stations in Helsinki Metropolitan Area: Distinct effects on renters, homeowners, and pre-existing housing dwellers," Journal of Transport Geography, Elsevier, vol. 114(C).
    11. Andrea Monaco & Matteo Ghio & Adamaria Perrotta, 2024. "Wealth dynamics in a multi-aggregate closed monetary system," Papers 2401.09871, arXiv.org.
    12. Ke Meng & Shouhao Li, 2023. "Welfare Regimes and Intergenerational Social Mobility: An Institutional Explanation of the Great Gatsby Curve," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 165(1), pages 355-375, January.
    13. Golka, Philipp, 2024. "Assets and infrastructures," SocArXiv rbqm9, Center for Open Science.
    14. Gina Raluca Guse & Marian Dragos Mangiuc, 2022. "Digital Transformation in Romanian Accounting Practice and Education: Impact and Perspectives," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 24(59), pages 252-252.
    15. Miriam Rehm & Alyssa Schneebaum & Barbara Schuster, 2022. "Intra-Couple Wealth Inequality: What’s Socio-Demographics Got to Do with it?," European Journal of Population, Springer;European Association for Population Studies, vol. 38(4), pages 681-720, October.

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