Capital Gains and Wealth Distribution in Italy

25 Pages Posted: 28 Jul 2008

Date Written: June 16, 2008


This paper analyses the impact of capital gains on the level and distribution of wealth held by Italian households between 1989 and 2005. The evaluation of these issues is achieved using both macro and micro data in order to obtain a more robust result. The estimation of capital gains through macro data is obtained using national accounts data while micro data from the Bank of Italy's Survey of Household Income and Wealth are used to reconstruct capital gains accounting for price variations in the single assets composing wealth and for households' idiosyncratic characteristics. Capital gains, defined as in the national accounts, explain about 40 per cent of the growth in real per capita wealth observed over the whole period, and about one-third of the growth in wealth concentration. Using capital gains reconstruction we estimate that households' inter-temporal mobility between wealth classes is significantly affected by capital gains, to which 20 per cent of the observed transitions can be ascribed. Furthermore, capital gains take second place among the determinants of wealth variations at the household level, behind savings but ahead of intergenerational transfers.

Keywords: households, wealth, saving, capital gains

JEL Classification: D31, E21

Suggested Citation

Cannari, Luigi and Gambacorta, Romina and D'Alessio, Giovanni, Capital Gains and Wealth Distribution in Italy (June 16, 2008). Bank of Italy Research Paper No. A10. Available at SSRN: or

Luigi Cannari

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184

Romina Gambacorta

Bank of Italy ( email )

Via Nazionale 91
00184 Roma

Giovanni D'Alessio (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
00184 Roma

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