The distribution of wealth between households - Research note 11/2013 by Eva Sierminska with Márton Medgyesi (2014) This research note examines wealth-holding information collected by the new Household Finance and Consumption Survey (HFCS) managed by the European Central Bank (ECB), the first results of which were published in April 2013.
First, it compares the extent of inequality in holdings of wealth against the extent of inequality of income, and discusses how this varies across countries.
Next, wealth inequality is decomposed into different components, in order to try to identify the main factors underlying the results.
In the next part of the research note, the division between liquid and illiquid wealth is examined and compared across household types. This is of considerable importance in respect of the ability to maintain consumption in the event of a drop in income. It is, therefore, a significant factor that should be taken into account when assessing the effects of the crisis on living standards.
In the following section, the timing of the data collection is considered and possible impacts are discussed. Since the survey was carried out at different times in different countries, the substantial variations that have occurred in recent years in both house-price and stock-market indices are likely to have had a major effect on the measurement of wealth and its distribution between households within countries, as well as between countries. This needs to be taken explicitly into account in any analysis.
In the final section, income as recorded by the ECB survey is compared with that recorded by EU-SILC. This is done by first reviewing the differences in the collection methodology and then by comparing the distribution of gross household income and its components.