Older or Wealthier?: The Impact of Age Adjustments on the Wealth Inequality Ranking of Countries

Ingvild Almås and Magne Mogstady

No 181, SOEPpapers on Multidisciplinary Panel Data Research from DIW Berlin, The German Socio-Economic Panel (SOEP)

Abstract: Differences in individual wealth holdings are widely viewed as a driving force of economic inequality. However, as this finding relies on cross-section data, we may confuse older with wealthier. We propose a new method to adjust for age effects in cross-sections, which eliminates transitory wealth inequality due to age, yet preserves inequality arising from other factors. This new method is superior to existing methods, like the much used Paglin-Gini, which is shown to have several problems. A new cross-country comparable database reveals that the choice of method is empirically important: Existing methods yield erroneous wealth inequality rankings of countries.

Keywords: Wealth inequality; Life cycle; Age adjustments; Gini coefficient (search for similar items in EconPapers)
JEL-codes: D31 D63 D91 E21 (search for similar items in EconPapers)
Pages: 39 p.
Date: 2009
New Economics Papers: this item is included in nep-age, nep-hap and nep-ltv
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https://www.diw.de/documents/publikationen/73/diw_01.c.98056.de/diw_sp0181.pdf (application/pdf)

Related works:
Working Paper: Older or wealthier? The impact of age adjustments on the wealth inequality ranking of countries (2009)
Working Paper: Older or Wealthier? The Impact of Age Adjustments on the Wealth Inequality Ranking of Countries (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:diw:diwsop:diw_sp181

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