Applied Economics Lunch Seminar

Du 22/06/2021 de 12:30 à 13:30

WRONSKI Marcin (SGH Warsaw School of Economics )

The impact of social security wealth on the distribution of household wealth in the European Union. Evidence from the Eurosystem Household Finance and Consumption Survey.

Social security wealth has an important role in securing consumption in old-age. Therefore public pension entitlements are an important part of the household wealth portfolio. Existing literature studies find that social security wealth reduces wealth inequality. We use a novel data source – the Eurosystem Household and Finance Consumption Survey – to compare the impact of the public pension system on wealth inequality in 19 European countries. To assess the equalizing impact of the public pension system we apply inequality decomposition techniques. Although in all countries social security wealth reduces wealth inequality, the strength of the impact varies strongly across countries. The equalizing impact of social security wealth on augmented wealth inequality is strongest in Austria, Estonia, Germany, Netherlands, and Cyprus. In Slovenia, Greece, and Croatia the equalizing impact is rather weak. The evidence on the impact of social security wealth on cross-country differences in wealth is mixed. On the one hand, cross-country wealth gaps assessed at chosen percentiles of the augmented wealth distribution, are smaller than in the case of private wealth distribution. On the other hand, however, the decomposition shows that augmented wealth inequality is to a larger extent generated by between-country inequality than private wealth inequality.