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Older or wealthier? The impact of age adjustments on the wealth inequality ranking of countries

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  • Ingvild Almås

    ()
    (Norwegian School of Economics and Business Administration)

  • Magne Mogstady

    ()
    (Statistics Norway)

Abstract

Differences in individual wealth holdings are widely viewed as a driving force of economic inequality. However, as this finding relies on cross-section data, we may confuse older with wealthier. We propose a new method to adjust for age effects in cross-sections, which eliminates transitory wealth inequality due to age, yet preserves inequality arising from other factors. This new method is superior to existing methods, like the much used Paglin-Gini, which is shown to have several problems. A new cross-country comparable database reveals that the choice of method is empirically important: Existing methods yield erroneous wealth inequality rankings of countries.

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File URL: http://www.ecineq.org/milano/WP/ECINEQ2009-113.pdf
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Bibliographic Info

Paper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 113.

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Length: 39 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:inq:inqwps:ecineq2009-113

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Keywords: Wealth inequality; Life cycle; Age adjustments; Gini coeffcient.;

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Cited by:
  1. Ingvild Almås & Tarjei Havnes & Magne Mogstad, 2011. "Baby booming inequality? Demographic change and earnings inequality in Norway, 1967–2000," Journal of Economic Inequality, Springer, vol. 9(4), pages 629-650, December.
  2. Almås, Ingvild & Havnes, Tarjei & Mogstad, Magne, 2011. "Baby Booming Inequality? Demographic Change and Inequality in Norway, 1967{2004," Discussion Paper Series in Economics 6/2010, Department of Economics, Norwegian School of Economics.

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