Uma conversa no twitter:
Clara Martínez-Toledano
@cmtneztt
Has wealth inequality evolved differently in Europe than in the US over the last five decades? If so, why?
The 🧵 is based on “Wealth Inequality Dynamics in Europe and the US: Understanding the Determinants”, which is joint work with @thomas_blncht.
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BM_EuropeWealthInequality_2022.pdf
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We study the interaction between the long-term dynamics of aggregate household wealth and the wealth distribution in Europe and the US.
We do so by building the first Distributional Wealth Accounts for Europe, including households’ assets, liabilities, investment flows, and the wealth distribution for most European countries from 1970-2020. We uncover two relevant facts.
1) The evolution of aggregate wealth relative to national income has been quite similar in Europe and the US, steadily increasing from 3 times national income in 1970 to nearly 5 and 6 times in 2018 in the US and Europe, respectively.
dropbox.com
BM_EuropeWealthInequality_2022.pdf
Shared with Dropbox
We study the interaction between the long-term dynamics of aggregate household wealth and the wealth distribution in Europe and the US.
We do so by building the first Distributional Wealth Accounts for Europe, including households’ assets, liabilities, investment flows, and the wealth distribution for most European countries from 1970-2020. We uncover two relevant facts.
1) The evolution of aggregate wealth relative to national income has been quite similar in Europe and the US, steadily increasing from 3 times national income in 1970 to nearly 5 and 6 times in 2018 in the US and Europe, respectively.
The wealth to income ratio has been slightly higher in Europe than in the US in recent years, mainly due to the larger decline in house prices in the US during the global financial crisis.
2) However, the dynamics of wealth inequality have been strikingly different in both regions. After an equalizing period during the 1970s, the top 1% wealth share has risen in both regions since 1980, but much more moderately in Europe than in the US.
Interestingly, there is no single European country with the wealth concentration levels of the United States since the mid-1980s (see gray lines above for country-specific wealth shares across Europe).
Why have the wealth inequality trajectories been so different across the two regions? We shed some light around this issue by using a wealth accumulation decomposition in which the three forces shaping wealth inequality can be capital gains, saving rates and/or labor incomes.
We use the wealth accumulation decomposition to run some counterfactual simulations where we assign the capital gains and labor income shares of France (pretty close to the European average and with available data since the 1970s) to the US.
The US wealth concentration levels would have been lower had the US the labor income inequality and asset price trajectories of France. This is due to the weaker rise in labor income inequality and the stronger rise in house prices relative to financial assets in Europe.
Europe than in the US. Cross-country comparisons can be powerful to understand wealth inequality trajectories!
All the data series used in the article can be publicly accessed online as part of the World Inequality Database (http://wid.world).
Home - WID - World Inequality Database
Home The source for global inequality data. Open access, high quality wealth and income inequality data...
Home The source for global inequality data. Open access, high quality wealth and income inequality data...
@safege_transit
Replying to
@cmtneztt
The United States inequality began with the Economic Recovery Tax Act of 1981. That started the hoarding of capital. Then mergers, acquisitions, and failed downsizing soon followed. Outsourcing, and successful downsizing came later with the technology that made it possible.
@dmissp
I always think of this site when I see charts like this, since they always seem to line up.
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