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The Joint Distribution of Income and Wealth in Uruguay

Author

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  • Graciela Sanroman

    (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

  • Guillermo Santos

    (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

Abstract

This paper analyzes the joint distribution of income and wealth in Uruguay, and compares it to that of Chile, Spain and the U.S. using data from Surveys of Household Finances and Wealth. First, we analyze income and wealth separately and find that wealth is much more concentrated and notably more asymmetric than income. Afterwards, we provide non-parametric estimation of copulas for income and wealth. As expected, high income households are among the wealthiest, while low income households are mostly in the bottom of the wealth distribution, but dependence at the top is much stronger. Although this fact is observed in all the economies analyzed, by performing a test of equality between copulas we find that the pattern of dependence significantly varies across countries, except for the couple of Spain-Uruguay. Finally, we assess for the sources of income and wealth heterogeneity in Uruguay and conclude that education strongly influences income, wealth and the relationship between them. However, most of the wealth heterogeneity and some remarkable features of its relationship with income (in particular the peak at the top of the joint distribution) are not explained by the household characteristics commonly used to study income.

Suggested Citation

  • Graciela Sanroman & Guillermo Santos, 2017. "The Joint Distribution of Income and Wealth in Uruguay," Documentos de Trabajo (working papers) 0717, Department of Economics - dECON.
    • Handle: RePEc:ude:wpaper:0717
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    File URL: https://hdl.handle.net/20.500.12008/10760
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    Cited by:

    1. Gandelman, Néstor & Lluberas, Rodrigo, 2022. "Wealth in Latin America," Research Department working papers 1904, CAF Development Bank Of Latinamerica.
    2. Mauricio De Rosa, 2018. "Wealth distribution in Uruguay: capitalizing incomes in the dark," Documentos de Trabajo (working papers) 18-07, Instituto de Economía - IECON.
    3. Mauricio De Rosa, 2022. "Accumulation, inheritance and wealth distribution: first estimates of the untold half," Documentos de Trabajo (working papers) 22-07, Instituto de Economía - IECON.
    4. Carlos Madeira, 2023. "Adverse selection, loan access and default behavior in the Chilean consumer debt market," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-29, December.
    5. Sehnbruch, Kirsten & Carranza, Rafael & Contreras, Dante, 2020. "Unemployment insurance in Chile: lessons from a high inequality developing country," LSE Research Online Documents on Economics 107824, London School of Economics and Political Science, LSE Library.

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    More about this item

    Keywords

    income; wealth; inequality; copula; non-parametric estimation;
    All these keywords.

    JEL classification:

    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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