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Income Inequality and Household Debt Distribution: A Cross-Country Analysis using Wealth Surveys

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  • Claire Lebarz

Abstract

This paper provides new and unique estimates of households debt leverage along the distribution of income using microdata from wealth surveys. We build a new dataset covering twenty one OECD countries that extends the homogenization of surveys data initiated by the Luxembourg Wealth Study. Most countries of our sample experienced an important increase of households borrowing both in absolute terms and relative to household income. Our analysis provides evidence that countries which have grown more unequal are also the ones where the distribution of debt along the income distribution is the most unbalanced and financially fragile. This link is found persistent after controlling for socio-demographic differences and transitory shocks to income in deciles regression.

Suggested Citation

  • Claire Lebarz, 2015. "Income Inequality and Household Debt Distribution: A Cross-Country Analysis using Wealth Surveys," LWS Working papers 20, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:lwswps:20
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    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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