OECD Economics Department Working Papers
Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.
- ISSN: 18151973 (online)
- https://doi.org/10.1787/18151973
Household finance and income inequality in the euro area
The size and composition of assets and liabilities of households differ vastly across the income distribution in euro area countries. This paper shows that differences between income groups in household finance on both sides of the balance sheet contribute to income inequality. The distribution of household credit is two times as unequal and the distribution of stock market wealth four times as unequal as the distribution of household income. Larger credit and stock markets may thus widen income inequality by providing people with high incomes with better investment opportunities and raising the returns on their savings. In addition, financial institutions help people protect their consumption against temporary changes in their income. But they do so unevenly across the distribution, as a household is more likely to be denied credit if it has a low income. No evidence is found of discrimination in credit provision against women or immigrants.
Keywords: euro area, immigrants, discrimination, household credit, wealth inequality, Women, stock market, income inequality
JEL:
E51: Macroeconomics and Monetary Economics / Monetary Policy, Central Banking, and the Supply of Money and Credit / Money Supply; Credit; Money Multipliers;
G2: Financial Economics / Financial Institutions and Services;
D63: Microeconomics / Welfare Economics / Equity, Justice, Inequality, and Other Normative Criteria and Measurement;
J16: Labor and Demographic Economics / Demographic Economics / Economics of Gender; Non-labor Discrimination;
E21: Macroeconomics and Monetary Economics / Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy / Macroeconomics: Consumption; Saving; Wealth;
D14: Microeconomics / Household Behavior and Family Economics / Household Saving; Personal Finance
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