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Capital Gains and Wealth Distribution in Italy

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  • Luigi, Cannnari
  • 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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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 15108.

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Date of creation: May 2008
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Handle: RePEc:pra:mprapa:15108

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Keywords: keywords: Households; Wealth; Saving; Capital gains;

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References

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  1. 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.
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Cited by:
  1. Anna Fräßdorf & Markus Grabka & Johannes Schwarze, 2011. "The impact of household capital income on income inequality—a factor decomposition analysis for the UK, Germany and the USA," Journal of Economic Inequality, Springer, vol. 9(1), pages 35-56, March.
  2. Andrea Neri, 2009. "Measuring wealth mobility," Temi di discussione (Economic working papers) 703, Bank of Italy, Economic Research and International Relations Area.
  3. Luigi, Cannnari & Giovanni, D'Alessio, 2008. "Intergenerational Transfers in Italy," MPRA Paper 15111, University Library of Munich, Germany.

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