Wealth inequality of nations

https://doi.org/10.1177/00031224211027800

Explanation

Comparative studies analyzing income inequality have produced several frameworks to investigate the institutional determinants of income stratification.

In contrast, there is no such framework that explains cross-country differences in wealth inequality, and there appears to be far less empirical evidence.

These are because international patterns of wealth inequality are very different from those of income.

The researchers aimed to track different wealth components in order to explain cross-country differences in wealth inequality.

For their study, they used the literature on financialization and housing, arguing that housing equity is a central component of comparative analysis of wealth inequality.

Using harmonized data from 15 countries included in the Luxembourg Wealth Study (LWS), we show that there is no association between income and wealth inequality or concentration at the national level.

They also used a decomposition approach to estimate the extent to which national levels of wealth inequality and concentration are associated with cross-country differences in the distribution of wealth portfolios and specific asset components.

From the role of housing equity, financial assets, non-housing real assets, and non-housing debt, we showed that international variation in wealth inequality and concentration is intensively determined by the distribution of housing equity.