Wealth and Income in the Euro Area: Heterogeneity in Households’ Behaviours?

52 Pages Posted: 22 Jul 2014

See all articles by Luc Arrondel

Luc Arrondel

Paris School of Economics (PSE)

Muriel Roger

Banque de France

Frederique Savignac

University Paris-Est Créteil (UPEC)

Date Written: July 2014

Abstract

This article aims at linking the household wealth and income distributions for 15 European countries using the Household Finance and Consumption Survey. We study the role played by the household’s location in the income distributions in determining its location in the wealth distribution. A generalized ordered probit model is estimated to explain the role played by the position in the income distribution and by intergenerational transfers on the probability to be in a given wealth decile in each country. As expected, we obtain that a rise in income distribution or having received gifts and inheritances increases the probability to be in higher wealth deciles. Most importantly, we find evidences of heterogeneity in accumulation behaviours along the wealth distribution in France, Finland, Germany, Greece, Italy, Slovakia and Spain. The effect of income or inheritance on wealth accumulation varies, depending on the rank of the households in the wealth distribution. We also highlight some specificity in the top of the wealth distribution.

Keywords: wealth and income distributions, inheritances, accumulation behaviours, cross-country comparisons, generalized ordered probit model

JEL Classification: D31, C35

Suggested Citation

Arrondel, Luc and Roger, Muriel and Savignac, Frederique, Wealth and Income in the Euro Area: Heterogeneity in Households’ Behaviours? (July 2014). Banque de France Working Paper No. 497. Available at SSRN: https://ssrn.com/abstract=2469142 or http://dx.doi.org/10.2139/ssrn.2469142

Luc Arrondel (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Muriel Roger

Banque de France ( email )

France

Frederique Savignac

University Paris-Est Créteil (UPEC) ( email )

61 avenue du General de Gaulle
Creteil cedex, 94010
France

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