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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. Victor Chernozhukov & Iván Fernández-Val & Blaise Melly, 2013. "Inference on counterfactual distributions," CeMMAP working papers, Centre for Microdata Methods and Practice, Institute for Fiscal Studies CWP17/13, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  2. 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, Springer, vol. 4(3), pages 375-383, December.
  3. Michael Haliassos & Dimitris Christelis & Dimitris Georgarakos, 2010. "Differences in Portfolios across Countries: Economic Environment versus Household Characteristics," MEA discussion paper series, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy 10204, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  4. Jonathan Crook & Stefan Hochguertel, 2007. "US and European Household Debt and Credit Constraints," Tinbergen Institute Discussion Papers, Tinbergen Institute 07-087/3, Tinbergen Institute.
  5. 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, Taylor & Francis Journals, vol. 12(1-2), pages 167-194.
  6. Maria Chiuri & Tullio Jappelli, 2010. "Do the elderly reduce housing equity? An international comparison," Journal of Population Economics, Springer, Springer, vol. 23(2), pages 643-663, March.
  7. 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, Gerontological Society of America, vol. 64(3), pages 402-414.
  8. Thomas Y. Mathä & Alessandro Porpiglia & Eva Sierminska, 2011. "The Immigrant/Native Wealth Gap in Germany, Italy and Luxembourg," BCL working papers, Central Bank of Luxembourg 57, Central Bank of Luxembourg.
  9. 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.
  10. Fairlie, Robert W, 1999. "The Absence of the African-American Owned Business: An Analysis of the Dynamics of Self-Employment," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 17(1), pages 80-108, January.
  11. 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., John Wiley & Sons, Ltd., vol. 20(4), pages 445-465.
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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, AIAS, Amsterdam Institute for Advanced Labour Studies luxembourg, AIAS, Amsterdam Institute for Advanced Labour Studies.

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