Wealth Differences across Borders and the Effect of Real Estate Price Dynamics: Evidence from Two Household Surveys

42 Pages Posted: 4 Jul 2014

See all articles by Thomas Mathae

Thomas Mathae

Banque de France

Alessandro Porpiglia

Banque Centrale du Luxembourg

Michael Ziegelmeyer

Banque centrale du Luxembourg; Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Social Law and Social Policy

Date Written: April 17, 2014

Abstract

Crossing borders, be it international or regional, often go together with price, wage or indeed wealth discontinuities. This paper identifies substantial wealth differences between Luxembourg resident households and cross-border commuter households despite their similar incomes. The average (median) net wealth difference is estimated to be €367,000 (€129,000) and increases for higher percentiles. Using several different regression and decomposition techniques, spatial (regional) differences in real estate price developments, and thus differences in accumulated nominal capital gains are shown to be one main driving factor for these wealth differences. Other factors contributing to the observed wealth differences are differences in age, income, education and other household characteristics.

Keywords: household survey, wealth, real estate price dynamics, cross-border commuting

JEL Classification: D31, J61, F22, R23, R31

Suggested Citation

Mathae, Thomas and Porpiglia, Alessandro and Ziegelmeyer, Michael Heinrich, Wealth Differences across Borders and the Effect of Real Estate Price Dynamics: Evidence from Two Household Surveys (April 17, 2014). ECB Working Paper No. 1672. Available at SSRN: https://ssrn.com/abstract=2426089

Thomas Mathae (Contact Author)

Banque de France ( email )

Paris
France

Alessandro Porpiglia

Banque Centrale du Luxembourg ( email )

2, boulevard Royal
Luxembourg, L-2983
Luxembourg

Michael Heinrich Ziegelmeyer

Banque centrale du Luxembourg ( email )

2, boulevard Royal
Luxembourg, L-2983
Luxembourg

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Social Law and Social Policy ( email )

Amalienstraße 33
München, 80799
Germany

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