External Publication

Wealth distribution and social mobility

This report explores the distribution of household wealth in the EU Member States and analyses the role of wealth in social mobility.

By: and Date: April 1, 2021 Topic: European Macroeconomics & Governance

This report was prepared for the European Foundation for the Improvement of Living and Working Conditions. The report is available on Eurofound’s website at Wealth distribution and social mobility | Eurofound (europa.eu). Copyright remains with Eurofound at all times.

Abstract

This report explores the distribution of household wealth in the EU Member States and analyses the role of wealth in social mobility. Using data from three datasets (the Household Finance and Consumption Survey, the Survey of Health, Ageing and Retirement in Europe and the Luxembourg Wealth Study), it focuses on wealth per household member. Wealth composition is compared across social groups and countries, and the role of housing assets in wealth distribution and negative wealth is assessed. The findings show that parental background, including parental wealth, has an impact on educational and wealth mobility. In order to promote equality of opportunities in terms of access to education and housing, the impact of wealth inequalities, including differences in parental wealth, should be counterbalanced. The report also suggests that regularising wealth declaration in the EU could be a way of promoting social justice by minimising hidden wealth and combating tax evasion.

Key findings

  • Wealth, or the lack of it, has major implications for a person’s opportunities in life. In the EU, there is an enormous gap in wealth: the gross assets of those in the top wealth quintile in the 21 EU Member States examined are 60 times larger compared to those in the bottom wealth quintile.
  • For the wealthiest in the EU, substantial incomes are generated through self-employed business, financial assets and real estate. The least wealthy – the 4% with negative wealth – tend to be people who are young, income- and asset-poor, unemployed and renting their accommodation, and who draw on private loans and credit lines. Less than one-fifth of people with negative net wealth are homeowners with mortgages.
  • Inclusive growth, with equal opportunities as a core principle, is at the centre of the EU’s growth strategy and the European Pillar of Social Rights. To counterbalance wealth differences, public policies for equal opportunities will be required to secure good living conditions during childhood, ensure minimum educational attainment and promote access to higher education.
  • To support inclusive growth and equal opportunities, it is critical that housing policies support fair and efficient ways to increase housing supply in cities, improve public transport and incentivise teleworking to reduce the demand on overcrowded city centres. To achieve this, a balance between supporting homeownership and providing public housing will be essential.
  • The introduction of a compulsory wealth declaration would help to clamp down on hidden wealth and hidden income, and go some way towards addressing wealth inequalities. Promoting financial literacy could also foster greater asset diversification to the benefit of the less well-off.

This report presents the results of research conducted largely prior to the outbreak of COVID-19 in Europe in February 2020. For this reason, the results do not fully take account of the outbreak.

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Past Event

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Speakers: Masood Ahmed, Victor J. Dzau, Amanda Glassman and Lawrence H. Summers Topic: Finance & Financial Regulation, Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: July 14, 2021
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European countries must do more to tackle the vaccine uptake gap. Vaccination data should be published at the maximum granularity level so researchers and local decision-makers can monitor progress.

By: Lionel Guetta-Jeanrenaud and Mario Mariniello Topic: European Macroeconomics & Governance Date: July 14, 2021
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Report of the G20 High Level Independent Panel on Financing the Global Commons for Pandemic Preparedness and Response.

By: Tharman Shanmugaratnam, Lawrence H. Summers, Ngozi Okonjo-Iweala, Ana Botin, Mohamed El-Erian, Jacob Frenkel, Rebeca Grynspan, Naoko Ishii, Michael Kremer, Kiran Mazumdar-Shaw, Luis Alberto Moreno, Lucrezia Reichlin, John-Arne Røttingen, Vera Songwe, Mark Suzman, Tidjane Thiam, Jean-Claude Trichet, Ngaire Woods, ZHU Min, Masood Ahmed, Guntram B. Wolff, Victor J. Dzau and Jeremy Farrar Topic: Global Economics & Governance Date: July 9, 2021
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By: Laura Nurski Topic: Innovation & Competition Policy Date: July 5, 2021
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The tension between the unprecedented need for global collective action and a growing aspiration to rebuild political communities behind national borders is a defining challenge for today’s policymakers.

By: Jean Pisani-Ferry Topic: Global Economics & Governance Date: July 1, 2021
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The Value of Money, Controversial Economic Cultures in Europe: Italy and Germany

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By: Francesco Papadia Topic: European Macroeconomics & Governance Date: June 10, 2021
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The pandemic has shown that many workers can efficiently work remotely, with benefits for wellbeing and even productivity. The European Union should develop a framework to facilitate hybrid work.

By: Monika Grzegorczyk, Mario Mariniello, Laura Nurski and Tom Schraepen Topic: Innovation & Competition Policy Date: June 9, 2021
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By: Jean Pisani-Ferry Topic: Global Economics & Governance Date: June 3, 2021
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