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Decomposing household wealth portfolios across countries: An age-old question?

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  • SIERMINSKA Eva
  • DOORLEY Karina

Abstract

Using harmonized wealth data and a novel decomposition approach, we show that cohort effects exist in the income pro?les of asset and debt portfolios for a sample of European countries and the U.S. We ?nd that observable characteristics explain a sizable portion of the wealth participation gap for the young in particular. Similar patterns are observed for most countries for the level of wealth held, conditional on participation. The bottom of the wealth distribution in the European countries (particularly Spain and Luxembourg) is, however, characterized by large unexplained differences to the U.S. distribution, possibly pointing to the existence of important safety nets, which shape wealth holdings in these countries. In accordance with past literature, we ?nd that institutions and other unobservables play a larger role for mature households (50 and over). We will also discuss the potential effect of the crisis on these results.

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Bibliographic Info

Paper provided by CEPS/INSTEAD in its series CEPS/INSTEAD Working Paper Series with number 2012-32.

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Length: 60 pages
Date of creation: Jul 2012
Date of revision:
Handle: RePEc:irs:cepswp:2012-32

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Keywords: household portfolios; decomposition; wealth;

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References

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  1. Alexis Yamokoski & Lisa Keister, 2006. "The Wealth Of Single Women: Marital Status And Parenthood In The Asset Accumulation Of Young Baby Boomers In The United States," Feminist Economics, Taylor & Francis Journals, vol. 12(1-2), pages 167-194.
  2. José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(4), pages 445-465.
  3. Christelis, Dimitris & Georgarakos, Dimitris & Haliassos, Michalis, 2010. "Differences in Portfolios across Countries: Economic Environment versus Household Characteristics," CEPR Discussion Papers 8017, C.E.P.R. Discussion Papers.
  4. Eva M. Sierminska & Joachim R. Frick & Markus M. Grabka, 2010. "Examining the gender wealth gap," Oxford Economic Papers, Oxford University Press, vol. 62(4), pages 669-690, October.
  5. Maria Concetta Chiuri & Tullio Jappelli, 2006. "Do the elderly reduce housing equity? An international comparison," CSEF Working Papers 158, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  6. Janet C. Gornick & Eva Sierminska & Timothy M. Smeeding, 2009. "The Income and Wealth Packages of Older Women in Cross-National Perspective," Journals of Gerontology: Series B, Gerontological Society of America, vol. 64(3), pages 402-414.
  7. Fairlie, Robert, 2014. "The Absence of the African-American Owned Business: An Analysis of the Dynamics of Self-Employment," Santa Cruz Department of Economics, Working Paper Series qt49c4n0fg, Department of Economics, UC Santa Cruz.
  8. Jonathan Crook & Stefan Hochguertel, 2007. "US and European Household Debt and Credit Constraints," Tinbergen Institute Discussion Papers 07-087/3, Tinbergen Institute.
  9. Eva Sierminska & Andrea Brandolini & Timothy Smeeding, 2006. "The Luxembourg Wealth Study – A cross-country comparable database for household wealth research," Journal of Economic Inequality, Springer, vol. 4(3), pages 375-383, December.
  10. Victor Chernozhukov & Iván Fernández-Val & Blaise Melly, 2012. "Inference on counterfactual distributions," CeMMAP working papers CWP05/12, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  11. Mathä, Thomas Y. & Porpiglia, Alessandro & Sierminska, Eva, 2011. "The immigrant/native wealth gap in Germany, Italy and Luxembourg," Working Paper Series 1302, European Central Bank.
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Citations

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Cited by:
  1. Alessio Fusco & Philippe Kerm & A. Alieva & L. Bellani & F. Etienne-Robert & A.-C. Guio & I. Kyzyma & K. Leduc & P. Liégeois & M.N.P. Alperin & A. Reinstadler & E. Sierminska & D. Sologon & P. Thill , 2013. "GINI Country Report: Growing Inequalities and their Impacts in Luxembourg," GINI Country Reports luxembourg, AIAS, Amsterdam Institute for Advanced Labour Studies.

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