Wealth accumulation in Great Britain 1995-2005:the role of house prices and the life cycle

Francesca Bastagli () and John Hills

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper examines trends in the distribution of household wealth in Great Britain from 1995 to 2005 using the British Household Panel Survey (BHPS). The data show that wealth is very unevenly distributed and reveal a widening absolute gap over the period between wealthier households and those with no or negative wealth. However, in relative terms, wealth grew fastest for households in the middle of the distribution and inequality measured by the Gini coefficient decreased. This mainly reflected housing wealth becoming a greater share of total net worth, more equally distributed, and the highest percentage increase in housing wealth taking place in the middle of the distribution. To estimate the distributional impact of the remarkable rise in house prices which defined this period, we simulate the distribution of net 2005 wealth in the hypothetical scenario in which house prices remained at their 1995 levels in real terms and find that the reduction in wealth inequality is almost entirely accounted for by changes in house prices. The paper also finds that, controlling for factors such as age, households that gained most from the house price boom were mortgagors, in particular those that were initially wealthier, and were advantaged in other ways such as by level of educational qualification.

Keywords: wealth; wealth inequality; house prices; life cycle (search for similar items in EconPapers)
JEL-codes: D31 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2012-12
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Citations: View citations in EconPapers (1)

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http://eprints.lse.ac.uk/51286/ Open access version. (application/pdf)

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Working Paper: Wealth accumulation in Great Britain 1995-2005: The role of house prices and the life cycle (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:51286

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