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Accounting for Cross‐Country Differences in Wealth Inequality
Author(s) -
Cowell Frank,
Karagiannaki Eleni,
Mcknight Abigail
Publication year - 2018
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/roiw.12278
Subject(s) - economics , counterfactual thinking , inequality , distribution (mathematics) , demographic economics , cross country , income distribution , distribution of wealth , wealth distribution , value (mathematics) , econometrics , statistics , mathematical analysis , philosophy , mathematics , epistemology
There is considerable cross‐country variation in levels of household wealth and in wealth inequality. This paper assesses the extent to which these differences can be accounted for by differences in the distributions of households' demographic and economic characteristics. A counterfactual decomposition analysis of micro data from five countries (Italy, U.K., U.S., Sweden and Finland) is used to identify the effects of characteristics on component wealth holdings, their value and their distribution. The findings of the paper suggest that the biggest share of cross‐country differences is not attributable to the distribution of household demographic and economic characteristics but rather reflect strong unexplained country effects.