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THE WORLD DISTRIBUTION OF HOUSEHOLD WEALTH

THE WORLD DISTRIBUTION OF HOUSEHOLD WEALTH. Stephanie Carret & Jinjie Cui (Eric) Faculty of Economic Science University of Warsaw 3rd November, 2009. The Planning for today. Review of the paper: main ideas Analysis of illustrative graphs Other views on the subject

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THE WORLD DISTRIBUTION OF HOUSEHOLD WEALTH

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  1. THE WORLD DISTRIBUTION OF HOUSEHOLD WEALTH Stephanie Carret & Jinjie Cui (Eric) Faculty of Economic Science University of Warsaw 3rd November, 2009 Development Workshop

  2. The Planning for today • Review of the paper: main ideas • Analysis of illustrative graphs • Other views on the subject • What questions can we raise? Development Workshop

  3. Review of the paper: Dataset • Householf wealth: the value of physical and financial assets • Household: families, person, inviduals, but above the age of 20 • Information: household surveys, tax record, national balance sheets • OECD’s countries well covered but not low and middle-income countries • Difference offset by using available data for China, Indian and Indonesia • In total, data available for 39 countries = 61% of W.pop =80% of global household wealth (Milanovic and small nbr of countries involved in the big changes in inequality) • Use of regression to make a data estimation for the missing countries • An UNU-WIDER utility program is used to estimate the world distribution of wealth Development Workshop

  4. Review of the paper: main ideas • The authors examine a parameter linked to well-being which has been less studied than income: household wealth • Wealth distribution is more unequal than income: Gini of 0.892 for wealth and 0.795 for income • Wealth distribution is highly concentrated • Trends • for the last decades, income inequality has more risen than wealth inequality • India/China • European transition countries/Russia • Africa, Latin America and other low-income countries • Wealth and income inequality are linked but not always, it depends on the conjuncture • wealth follows assets pricing on the market • Changes in exchange rates • Use of both PPP exchange rates and official exchange rates • The Gini value declines when adjusting to PPP exchange reates Development Workshop

  5. Analysis of illustrative graphs (1) Development Workshop

  6. Analysis of illustrative graphs (2) Development Workshop

  7. Analysis of illustrative graphs (3) Development Workshop

  8. Analysis of graph (4) • Inverted shares of pop°/wealth between emergent or less developed countries and wealthier countries • Confirmed trend of the top 1% Development Workshop

  9. Analysis of illustrative graphs (5) Development Workshop

  10. Analysis of illustrative graphs (6) Development Workshop

  11. Analysis of illustrative graphs (7) Development Workshop

  12. Analysis of illustrative graphs (8) Development Workshop

  13. Analysis of illustrative graphs (9) Development Workshop

  14. Other views on Wealth Distribution (1) • Wealth transmission and its role on wealth concentration: Wealth Inequality and Intergenerational Links, by Mariacristina de Nardi, in Review of Economic Studies (2004). The transmission of physical and human capital from parents to children is a very important determinant of households’ wealth and earnings: savings behaviour • Impact of wealth distribution on development: Long-Run Changes in the Concentration of Wealth: An Overview of Recent Findingsby H. Ohlsson, J.Roine, D.Waldenström, in Personal Wealth from a Global Perspective, 2008. They find that development has lowered wealth concentration Development Workshop

  15. Other views on Wealth Distribution (2) • Study on influence share’s of economical forces on wealth and income inequality: Distribution of income and wealth among individuals, in JE Stiglitz - Econometrica, 1969. Several assumptions about savings, inheritance policies, labor homogeneity and reproduction in the context of a neoclassical growth model and their implications on wealth and income distribution • The case of Japan: The Distribution of Income and Wealth in Japan, by Bauer, John, Mason, Andrew, in Review of income & Wealth, 1992. Income inequality is quite reduced in Japan thanks to many policies and cultural aspects. But the rapid appreciation of the stockmarket and land prices during the late 1980s led to greater inequality in the distribution of wealth Development Workshop

  16. What questions can we raiseDebate • This paper puts an accent on the necessary differenciation between wealth and income inequality • What is the most development concerning problem to focus on? • What will be the influence of emergent (BRIC) countries on the global wealth distribution in the coming 10 years? • When and what will be the effects of the catching up of « left behinds » on wealth distribution? Development Workshop

  17. Source: Paper: Davies, J,B., Sandstrom, Susanna, Shorrocks, & Wollf, E,N (2008). “The World Distribution of Household Wealth”, UNU-WIDER Discussion Paper No.2008/03. Internet: Scholar Google www.wikipedia.org Development Workshop

  18. Questions? Thank you. Development Workshop

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