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Capital Gains and Wealth Distribution in Italy

  • Luigi, Cannnari
  • Giovanni, D'Alessio
  • Romina, Gambacorta

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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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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  1. Monica Paiella, 2004. "Does wealth affect consumption? Evidence for Italy," Temi di discussione (Economic working papers) 510, Bank of Italy, Economic Research and International Relations Area.
  2. Claudia Biancotti & Giovanni D'Alessio & Andrea Neri, 2004. "Errori di misura nell�indagine sui bilanci delle famiglie italiane," Temi di discussione (Economic working papers) 520, Bank of Italy, Economic Research and International Relations Area.
  3. Mankiw, N.G. & Zeldes, S.P., 1990. "The Consumption Of Stockholders And Non-Stockholders," Weiss Center Working Papers 23-90, Wharton School - Weiss Center for International Financial Research.
  4. Luigi Guiso & Monica Paiella, 2005. "The Role Of Risk Aversion In Predicting Individual Behavior," Temi di discussione (Economic working papers) 546, Bank of Italy, Economic Research and International Relations Area.
  5. Henley, Andrew, 1998. "Changes in the Distribution of Housing Wealth in Great Britain, 1985-91," Economica, London School of Economics and Political Science, vol. 65(259), pages 363-80, August.
  6. Shorrocks, Anthony F, 1983. "The Impact of Income Components on the Distribution of Family Incomes," The Quarterly Journal of Economics, MIT Press, vol. 98(2), pages 311-26, May.
  7. Giovanni D'Alessio & Ivan Faiella, 2002. "Non-response behaviour in the Bank of Italy�s Survey of Household Income and Wealth," Temi di discussione (Economic working papers) 462, Bank of Italy, Economic Research and International Relations Area.
  8. Cannari Luigi & D'Alessio G. & Venturini Andrea, 2003. "La ricchezza delle famiglie nelle regioni italiane," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 1-2, pages 47-86.
  9. Orazio P. Attanasio & James Banks & Sarah Tanner, 2002. "Asset Holding and Consumption Volatility," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 771-792, August.
  10. repec:ltr:wpaper:2001.09 is not listed on IDEAS
  11. Andrea Brandolini & Giovanni D’Alessio & Luigi Cannari & Ivan Faiella, 2004. "Household Wealth Distribution in Italy in the 1990s," Economics Working Paper Archive wp_414, Levy Economics Institute.
  12. Fabiano Schivardi & Roberto Torrini, 2004. "Firm size distribution and employment protection legislation in Italy," Temi di discussione (Economic working papers) 504, Bank of Italy, Economic Research and International Relations Area.
  13. Michael Harris, 2001. "The Income of Nations: Measurement with (What?) Theory," Working Papers 2001.09, School of Economics, La Trobe University.
  14. 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.
  15. Michael Reiter, 1999. "Asset prices and the measurement of wealth and saving," Economics Working Papers 396, Department of Economics and Business, Universitat Pompeu Fabra.
  16. Joe Peek, 1986. "Household wealth composition: the impact of capital gains," New England Economic Review, Federal Reserve Bank of Boston, issue Nov, pages 26-39.
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