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

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.