Increases in owner-occupation and house prices in the UK over the period 2000–2005 led to falls in relative measures of wealth inequality, according to a new study. Researchers compared the level, composition and distribution of household wealth in five industrial countries: the UK, USA, Italy, Finland and Sweden.
- The Nordic countries have lower average wealth holdings, and smaller absolute gaps between low-wealth and high-wealth households – but high relative measures of wealth inequality.
- Italian households hold very little debt and are much more likely to own their homes outright, leading to relatively high median levels of wealth.
- In contrast American households tend to hold much more housing debt well into retirement.
- In the UK, increases in owner-occupation and house prices in the period 2000–2005 led to substantial increases in household wealth, particularly median wealth holdings. This has led to falls in relative measures of wealth inequality such as the Gini coefficient, even though absolute gaps between high- and low-wealth households have grown substantially.
- There are underlying country differences in terms of distributions of age, household composition, educational attainment and income as well as wealth and debt portfolios.
- Educational loans are increasing in their size and prevalence in some countries and look set to create some marked differences in the distribution of wealth for different age cohorts.
Source: Frank Cowell, Eleni Karagiannaki and Abigail McKnight, Mapping and Measuring the Distribution of Household Wealth: A Cross-country Analysis, LWS Working Paper 12, Luxembourg Income Study