This paper considers a parametric model for the joint distribution of income and wealth. The model is used to analyze income and wealth inequality in five OECD countries using comparable household-level survey data. We focus on the dependence parameter between the two variables and study whether accounting for wealth and income jointly reveals a different pattern of social inequality than the traditional “income only” approach. We find that cross-country variations in the dependence parameter effectively account only for a small fraction of cross-country differences in a bivariate measure of inequality. The index appears primarily driven by differences in inequality in the wealth distribution.
This research is part of the WealthPort project (Household wealth portfolios in Luxembourg in a comparative perspective) financed by the Luxembourg “Fonds National de la Recherche” (contract C09/LM/04) and by core funding for CEPS/INSTEAD from the Ministry of Higher Education and Research of Luxembourg. Comments from participants to the IARIW 32nd General Conference (Boston) and to the 46th Italian Statistical Society meeting (Rome) are gratefully acknowledged.
Jäntti, M., Sierminska, E.M. and Van Kerm, P. (2015), "Modeling the Joint Distribution of Income and Wealth", Measurement of Poverty, Deprivation, and Economic Mobility (Research on Economic Inequality, Vol. 23), Emerald Group Publishing Limited, Leeds, pp. 301-327. https://doi.org/10.1108/S1049-258520150000023010
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