DP6680 Wealth inequality and household structure: US vs. Spain

Author(s): Olympia Bover

Publication Date: February 2008

Keyword(s): Household structure , International comparisons , Wealth distribution

JEL(s): D31

Programme Areas: Financial Economics

Link to this Page: www.cepr.org/pubs/dps/DP6680.asp.asp.asp

We study the link between culturally inherited household structure and wealth distribution in international comparisons using household data for the US and Spain (the SCF and the EFF). We estimate counterfactual US distributions relying on the Spanish household structure. Our results show that differences in household structure account for most of the differences in the lower part of the distribution between the two countries, but mask even larger differences in the upper part of the distribution. Imposing the Spanish household structure to the US wealth distribution has little effect on summary measures of inequality. However, this is the net result of reduced differences at the bottom and increased differences at the top. So there is distinct additional information in considering the whole distribution. We also report some evidence of an association between these wealth distribution differences and wealth composition. Finally, we present results for the within-group differences between the two countries using quantile regressions and find a reversing pattern by age.