Wealth Inequality: A Survey

Cowell, Frank; Kerm, Philippe Van

doi:10.1111/joes.12114

“…Indeed, savings and assets also contribute to living standards above and beyond their income flow. They assure financial security because they can be used to face unexpected events (Cowell & Van Kerm, 2015). In other words, when income is lost or decreased, due for example to unemployment, sickness, divorce, etc., accumulated wealth can be reduced in order to smooth out consumption (Brandolini et al, 2010).…”

Section: A Joint Income-wealth Perspective On European Social Policymentioning

confidence: 99%

“…From a different perspective assets and savings also largely affect long-term consumption and living standards, for the current as future generations. Indeed, assets allow to make purchases to move up the social ladder (Cowell & Van Kerm, 2015;Nam et al, 2008). Yet, in this paper we mainly focus on current well-being.…”

Section: A Joint Income-wealth Perspective On European Social Policymentioning

confidence: 99%

The Truly Vulnerable: Integrating Wealth into the Measurement of Poverty and Social Policy Effectiveness

Kuypers

¹

,

Marx

²

2018

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world's largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. There is a burgeoning literature on the significance and distribution of wealth in the rich world. It mainly focuses on the top. Wealth remains remarkably absent from the analysis of poverty and the redistributive effectiveness of welfare systems. This paper shows that real and financial assets can matter greatly when making assessments of who is poor and financially vulnerable. We introduce the concept of triple precariousness, afflicting households that not only have low income but also very low or non-existent assets to draw on for consumption needs, especially liquid assets. We analyse whether these households -whom we might call the truly vulnerable -have different characteristics from those that we identify as poor or needy on the basis of pure income based metrics. In an analysis for Belgium drawing on HFCS data, we show that households with a reference person that is young, unemployed, low educated, migrant, parent of dependent children, and above all a tenant are especially vulnerable in terms of their financial situation. By contrast, our assessment of the extent and depth of financial need among the elderly -a segment of society that is at a relatively high risk of income poverty -also changes. A substantial share of income poor elderly households own significant assets. We draw out some tentative consequences of these findings for anti-poverty and redistributive policies. Terms of use: Documents in JEL Classification:D31, G11

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“…They assure economic and financial security because they can be used to face unexpected financial setbacks. Moreover, assets provide their owners with a form of economic power by enabling them to make purchases to move up or maintain class status (Cowell & Van Kerm, 2015;Nam et al, 2008). In other words, assets contribute to living standards not only by generating income flows but also because they can be converted directly into cash or can be used as collateral (Azpitarte, 2012).…”

Section: Why Include Wealth In Poverty Measurement?mentioning

confidence: 99%

“…Belgium, Elderly Belgium, Non-elderly Germany, Elderly Germany, Non-elderly combination of the two. Likewise, if joint income-wealth poverty of a certain country changes over time it is not clear whether it is the consequence of changes in its age structure or in the wealth accumulations of its households (see Cowell & Van Kerm, 2015;Almås & Mogstad, 2012;Atkinson, 1971 for a discussion of this issue in relation to wealth inequality).…”

Section: Figure 6: Effect Of Equivalence Scale On Poverty Rates Eldementioning

confidence: 99%

Estimation of Joint Income-Wealth Poverty: A Sensitivity Analysis

Kuypers

¹

,

Marx

²

2016

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Most poverty studies build on measures that take account of recurring incomes from sources such as labour or social transfers. However, other financial resources such as savings and assets also affect living standards, often in very significant ways. Previous studies that have sought to incorporate assets into poverty measures suggest that (1) poverty estimates including wealth are considerably lower than income-based measures; (2) poverty rates of the elderly are more affected than those of the nonelderly and (3) poverty rates are especially affected by the household's main residence. This paper assesses the sensitivity of these conclusions to various plausible alternative assumptions, such as the poverty line calculation, the types of assets included in the wealth concept and choices with respect to the equivalence scale. Moreover, we check whether the impact of alternative assumptions is consistent across age and institutional settings. To that effect we compare Belgium and Germany, two countries with similar living standards and income poverty rates, but very different levels and distributions of wealth. Using data from the HFCS we show that accounting for wealth affects the incidence and age structure of poverty in a very substantial way. Country comparisons are also affected in very substantial ways. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E S Estimation of JointJEL Classification: I32

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“…Net wealth is understood as the total amount (marketable value) of financial assets plus non-financial assets (housing and land) less debts (Cowell-Van Kerm 2015, Kersley-Koutsoukis 2016. There is the huge challenge represented by the valuation (pricing) of the assets (housing for example).…”

Section: General Considerationsmentioning

confidence: 99%

The impact of the 2008 financial crisis on household income and wealth in Visegrad countries

Kocziszky¹,

Benedek²,

Szendi³

2018

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Wealth Inequality: A Survey

Abstract: Abstract. We survey the issues involved in comparing wealth distributions and measuring wealth inequality with illustrations from the Eurosystem Household Finance and Consumption Survey.

Cited by 92 publications

References 170 publications

The Truly Vulnerable: Integrating Wealth into the Measurement of Poverty and Social Policy Effectiveness

The Truly Vulnerable: Integrating Wealth into the Measurement of Poverty and Social Policy Effectiveness

Estimation of Joint Income-Wealth Poverty: A Sensitivity Analysis

The impact of the 2008 financial crisis on household income and wealth in Visegrad countries

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