Household Wealth in the Euro Area: The Importance of Intergenerational Transfers, Homeownership and House Price Dynamics

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The HFCN collects household-level data on households' finances and consumption in the euro area through a harmonised survey. The HFCN aims at studying in depth the micro-level structural information on euro area households' assets and liabilities. The objectives of the network are: Terms of use: Documents in1) understanding economic behaviour of individual households, developments in aggregate variables and the interactions between the two;2) evaluating the impact of shocks, policies and institutional changes on household portfolios and other variables;3) understanding the implications of heterogeneity for aggregate variables; 4) estimating choices of different households and their reaction to economic shocks; 5) building and calibrating realistic economic models incorporating heterogeneous agents; 6) gaining insights into issues such as monetary policy transmission and financial stability.The refereeing process of this paper has been co-ordinated by a team composed of Gabriel Fagan (ECB), Pirmin Fessler (Oesterreichische Nationalbank), Michalis Haliassos (Goethe University Frankfurt), Tullio Jappelli (University of Naples Federico II), Sébastien PérezDuarte (ECB), Jiri Slacalek (ECB), Federica Teppa (De Nederlandsche Bank), Peter Tufano (Oxford University) and Philip Vermeulen (ECB).The paper is released in order to make the results of HFCN research generally available, in preliminary form, to encourage comments and suggestions prior to final publication. The views expressed in the paper are the author's own and do not necessarily reflect those of the ESCB. Results from the Eurosystem Household Finance and Consumption Survey reveal substantial variation in household net wealth across euro area countries that await explanation. This paper focuses on three main factors for the wealth accumulation process, i) homeownership, ii) housing value appreciation and iii) intergenerational transfers. We show that these three factors, in addition to the common household and demographic factors, are relevant for the net wealth accumulation process in all euro area countries, and moreover that, using various decomposition techniques, differences therein, in particular in homeownership rates and house price dynamics, are important for explaining wealth differences across euro area countries. Acknowledgements This paper uses data from the Eurosystem Household Finance and Consumption Survey (HFCS

Inherited Advantage: Comparing Households that Receive Gifts and Bequests with Non-receiving Households across the Distribution of Household Wealth in 11 European Countries

“…Another way to explore the role of gifts and bequest is to ascertain their impact on household wealth. As longitudinal wealth data on households in Europe, including detailed information on wealth transfers, are either not available at all or do not yet go very far back in time (for an exception, see Karagiannaki, 2015), 3 most researchers probe the inheritance-wealth nexus by applying ordinary least squares (OLS) (linear) regression to crosssectional information (Semyonov and Lewin-Epstein, 2013;Mathä , Porpiglia and Ziegelmeyer, 2014). However, regression estimates of the effect of inheritance on wealth accumulation are difficult to interpret as the highly right-skewed wealth variable must be transformed.…”

Wealth Inequality and Homeownership in Europe

“…Our paper relates to the empirical literature concerned with cross-country comparisons of wealth accumulation and wealth inequality. First, Mathä et al (2014) analyze HFCS data to examine cross-country variation in wealth holdings and point to the important role of homeownership. While they also look at different wealth quantiles, they do not explore the determinants of the cross-country inequality differences.…”

Does homeownership promote wealth accumulation?

“…SeeDietz and Haurin (2003) for a thorough review of the empirical literature assessing various consequences of homeownership.4Hilber and Mayer (2009) find that the positive externalities may be restricted to areas with inelastic housing supply. Hilber and Turner (2014) explore how mortgage interest deduction affect homeownership taking into account local housing supply conditions.5 For explorations of the role of housing for the composition of household wealth portfolios across European countries, seeMathä et al (2014) andKaas et al (2015).6 SeeEngelhardt (1996) for an assessment of the effect of tax incentives for homeownership on household savings.7 The gender of the household head turns out to be a weak instrument in the dataset used in this paper. 8 Related empirical papers on the topic areHeaton and Lucas (2000),Cocco (2005),Yamashita (2003) andChetty and Szeidl (2014).…”