On Top of the Top - Adjusting wealth distributions using national rich lists

Publication: Working/Discussion PaperWU Working Paper

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Abstract

Poor coverage of the top in wealth surveys conceals the extent of wealth inequality. The literature mitigates this shortcoming by enriching survey data with rich lists and estimating the top tail with a Pareto distribution. However, recent studies rely on ad-hoc assumptions for some of the required parameters. We suggest a unified regression approach to estimate all parameters of a Pareto distribution jointly and extend our analysis with a more flexible three-parameter Generalized Pareto estimation. We introduce a new database of national rich lists (ERLDB) as an alternative to commonly used global rich lists to combine with survey data from the Household Finance and Consumption Survey (HFCS 2017). Our findings for 14 European countries show that wealth is more concentrated than surveys suggest, with almost doubling Top 1% shares in the most extreme cases. In contrast, countries with successful oversampling strategies tend to experience only minor changes in inequality metrics.
Original languageEnglish
Place of PublicationVienna
PublisherWU Vienna University of Economics and Business
DOIs
Publication statusPublished - 23 Dec 2020

Publication series

SeriesINEQ Working Paper Series
Number20

WU Working Paper Series

  • INEQ Working Paper Series

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