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Capital gains and wealth distribution in Italy

In: Proceedings of the IFC Conference on "Measuring the financial position of the household sector", Basel, 30-31 August 2006 - Volume 2

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  • Luigi Cannari
  • Giovanni D'Alessio
  • Romina Gambacorta

Abstract

This paper analyses the impact of capital gains on the level and distribution of wealth held by Italian households between 1989 and 2005. The evaluation of these issues is achieved using both macro and micro data in order to obtain a more robust result. The estimation of capital gains through macro data is obtained using national accounts data while micro data from the Bank of Italy’s Survey of Household Income and Wealth are used to reconstruct capital gains accounting for price variations in the single assets composing wealth and for households’ idiosyncratic characteristics. Capital gains, defined as in the national accounts, explain about 40 per cent of the growth in real per capita wealth observed over the whole period, and about one-third of the growth in wealth concentration. Using capital gains reconstruction we estimate that households’ inter-temporal mobility between wealth classes is significantly affected by capital gains, to which 20 per cent of the observed transitions can be ascribed. Furthermore, capital gains take second place among the determinants of wealth variations at the household level, behind savings but ahead of intergenerational transfers.

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This chapter was published in:

  • Irving Fisher Committee, 2007. "Proceedings of the IFC Conference on "Measuring the financial position of the household sector", Basel, 30-31 August 2006 - Volume 2," IFC Bulletins, Bank for International Settlements, number 26, December.
    This item is provided by Bank for International Settlements in its series IFC Bulletins chapters with number 26-08.

    Handle: RePEc:bis:bisifc:26-08

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    1. Monica Paiella & Luigi Guiso, 2004. "The Role of Risk Aversion in Predicting Individual Behaviour," Econometric Society 2004 Latin American Meetings 222, Econometric Society.
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    8. Orazio Attanasio & James Banks & Sarah Tanner, 1998. "Asset holding and consumption volatility," IFS Working Papers W98/08, Institute for Fiscal Studies.
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    10. Francesco Zollino, 2001. "Personal Saving and Social Security in Italy: Fresh Evidence from a Time Series Analysis," Temi di discussione (Economic working papers) 417, Bank of Italy, Economic Research and International Relations Area.
    11. Shorrocks, Anthony F, 1983. "The Impact of Income Components on the Distribution of Family Incomes," The Quarterly Journal of Economics, MIT Press, vol. 98(2), pages 311-26, May.
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    13. Giovanni D'Alessio & Ivan Faiella, 2002. "Non-response behaviour in the Bank of ItalyÂ’s Survey of Household Income and Wealth," Temi di discussione (Economic working papers) 462, Bank of Italy, Economic Research and International Relations Area.
    14. Claudia Biancotti & Giovanni D'Alessio & Andrea Neri, 2004. "Errori di misura nellÂ’indagine sui bilanci delle famiglie italiane," Temi di discussione (Economic working papers) 520, Bank of Italy, Economic Research and International Relations Area.
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    Cited by:
    1. Luigi, Cannnari & Giovanni, D'Alessio, 2008. "Intergenerational Transfers in Italy," MPRA Paper 15111, University Library of Munich, Germany.
    2. Andrea Neri, 2009. "Measuring wealth mobility," Temi di discussione (Economic working papers) 703, Bank of Italy, Economic Research and International Relations Area.
    3. Fräßdorf, Anna & Grabka, Markus M. & Schwarze, Johannes, 2011. "The Impact of Household Capital Income on Income Inequality - A Factor Decomposition Analysis for the UK, Germany and the USA," EconStor Open Access Articles, ZBW - German National Library of Economics.

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