Bridging the wealth divide? Examining the role of Stocks and Shares ISAs in reducing wealth inequality in the UK

George Rushworth

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

Abstract: This research examines whether Stocks and Shares Individual Savings Accounts (S&S ISAs) in the United Kingdom democratise wealth accumulation or reinforce existing socioeconomic disparities. Using longitudinal data from the Wealth and Asset Survey (2006-2020), the study employs multiple analytical approaches, with propensity score matching providing the most credible causal estimates. The findings reveal three key patterns: First, S&S ISA ownership is associated with approximately 27% higher wealth growth compared to similar non-owners. Second, adopting an S&S ISA generates substantial wealth benefits (227% for new adopters) that persist even after abandonment, with former ISA holders showing no significant disadvantage compared to never-owners. Third, contrary to expectations, S&S ISAs provide greater relative benefits for individuals without higher education, challenging assumptions that tax-efficient investment vehicles primarily benefit the already-advantaged. These results suggest that S&S ISAs can function as effective wealth-building tools with democratising potential if barriers to initial adoption among disadvantaged groups can be addressed. The study contributes to literature on wealth inequality and asset-based welfare by providing empirical evidence on the distributional effects of investment-based policy instruments within a liberal welfare regime.

Keywords: wealth inequality; stocks and shares ISAs; asset-based welfare; financial inclusion; liberal welfare regime (search for similar items in EconPapers)
JEL-codes: D31 G00 I38 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2026-01
New Economics Papers: this item is included in nep-fdg
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:141101

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