Researcher of the Month
Wealth distribution: 80 percent of wealth in the hands of the richest 20 percent
Current information on household wealth and income is crude and only comparable on an international level to a limited extent. A WU researcher proposes new approaches to improve the way distributional issues and inequality around the world are presented.
To better map inequality in countries, Sofie Waltl of the Department of Economics and the Research Institute Economics of Inequality at the Vienna University of Economics and Business proposes supplementing the globally used and uniform system of National Accounts (an accounting system that reports wealth, income and consumption totals for every country in the world) with distributional data. Distributional data provide information on what percentage of an economic component, such as wealth, belongs to different social groups. This can be done, for example, by means of household surveys that show the structure of the wealth holdings of private households.
This method makes it possible to find out how many households are income-poor but wealthy and are therefore much better prepared for times of crisis than households that are both income- and wealth-poor. The latter are virtually unprotected against inflation or unemployment, for example, and are unable to cushion even small changes in their economic situation.
Sofie Waltl compiled microdata from household surveys, information on the wealthiest households from “rich lists” and tables from wealth tax data for several European countries and matched them with national accounts data. Using this method, she examined the distribution of wealth in Austria in comparison with Germany, Finland, France and Spain. The main findings:
Wealth is highly concentrated at the top: The greatest concentration is in Austria and Germany. There, around 80 percent of total wealth is in the hands of the richest 20 percent.
In the countries surveyed, the top 20 percent by income own between 48 and 62 percent of total wealth.
In all countries, up to 10 percent of households are income-poor, asset-poor and rent their primary residence.
In contrast, 4.5 percent of households that are income- and asset-rich, own their own homes and have capital income.
Corporate wealth is also heavily concentrated at the top: more than 90 percent of all corporate wealth is held by the richest 20 percent.
About Sofie Waltl
Sofie Waltl researches and teaches at the Department for Economics and the Research Institute Economics of Inequality at the Vienna University of Economics and Business. In addition, she is employed at the LISER research institute in Luxembourg. Her research focuses on questions in the field of distributional economics, real estate and rental markets as well as methodological and statistical problems.
She studied mathematics at the University of Graz and the Graz University of Technology, and followed this up with a doctorate in economics in Graz. After stays at the University of California Berkeley and the European Central Bank in Frankfurt, she moved first to Luxembourg and finally to the Vienna University of Economics and Business.