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The Wealth Inequality of Nations

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  • Fabian T. Pfeffer
  • Nora Waitkus

Abstract

Comparative research on income inequality has produced several coherent frameworks to study the institutional determinants of income stratification. In contrast, no such framework and much less empirical evidence exist to explain cross-national differences in wealth inequality. This situation is particularly lamentable as cross-national patterns of inequality in wealth diverge sharply from those in income. We seek to pave the way for new explanations of cross-national differences in wealth inequality by tracing them to the influence of different wealth components. Drawing on the literatures on financialization and housing, we argue that housing equity should be the central building block of the comparative analysis of wealth inequality. Using harmonized data on fifteen countries included in the Luxembourg Wealth Study (LWS), we first demonstrate a lack of association between national levels of income and wealth inequality and concentration. Using decomposition approaches, we then estimate the degree to which national levels of wealth inequality and concentration relate to cross-national differences in wealth portfolios and the distribution of specific asset components. Considering the role of housing equity, financial assets, non-housing real assets, and non-housing debt, we reveal that cross-national variation in wealth inequality and concentration is centrally determined by the distribution of housing equity.

Suggested Citation

  • Fabian T. Pfeffer & Nora Waitkus, 2020. "The Wealth Inequality of Nations," LWS Working papers 33, LIS Cross-National Data Center in Luxembourg.
  • Handle: RePEc:lis:lwswps:33
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    References listed on IDEAS

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    1. Emmanuel Saez & Gabriel Zucman, 2020. "The Rise of Income and Wealth Inequality in America: Evidence from Distributional Macroeconomic Accounts," Journal of Economic Perspectives, American Economic Association, vol. 34(4), pages 3-26, Fall.
    2. Facundo Alvaredo & Lucas Chancel & Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2017. "Global Inequality Dynamics: New Findings from WID.world," American Economic Review, American Economic Association, vol. 107(5), pages 404-409, May.
    3. Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2018. "Distributional National Accounts: Methods and Estimates for the United States," The Quarterly Journal of Economics, Oxford University Press, vol. 133(2), pages 553-609.
    4. Maryse Fesseau & Florence Wolff & Maria Liviana Mattonetti, 2013. "A Cross-country Comparison of Household Income, Consumption and Wealth between Micro Sources and National Accounts Aggregates," OECD Statistics Working Papers 2013/3, OECD Publishing.
    5. Emmanuel Saez & Gabriel Zucman, 2016. "Editor's Choice Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data," The Quarterly Journal of Economics, Oxford University Press, vol. 131(2), pages 519-578.
    6. Pfeffer, Fabian T. & Schoeni, Robert F. & Kennickell, Arthur & Andreski, Patricia, 2016. "Measuring wealth and wealth inequality: Comparing two U.S. surveys," Journal of Economic and Social Measurement, IOS Press, issue 2, pages 103-120.
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    Cited by:

    1. Savage, Mike & Waitkus, Nora, 2022. "Property, wealth, and social change: Piketty as a social science engineer," LSE Research Online Documents on Economics 114939, London School of Economics and Political Science, LSE Library.
    2. Gornick, Janet & Sierminska, Eva, 2021. "Wealth Accumulation and Retirement Preparedness in Cross-National Perspective: A Gendered Analysis of Outcomes among Single Adults," IZA Policy Papers 181, Institute of Labor Economics (IZA).
    3. Konstantin A. Kholodilin & Sebastian Kohl, 2021. "Rent Price Control – Yet Another Great Equalizer of Economic Inequalities?: Evidence from a Century of Historical Data," Discussion Papers of DIW Berlin 1927, DIW Berlin, German Institute for Economic Research.
    4. Waitkus, Nora & Minkus, Lara, 2021. "Investigating the gender wealth gap across occupational classes," LSE Research Online Documents on Economics 108206, London School of Economics and Political Science, LSE Library.

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