Is property driving income distribution? – An analysis of the linkage between income and wealth in Finland, France and Spain

Ilja Kristian Kavonius and Veli-Matti Törmälehto

Journal of Comparative Economics, 2023, vol. 51, issue 3, 858-879

Abstract: In this article, the link between financial wealth and pre-tax household income distribution is scrutinised for three European countries using a conceptually fully consistent macro framework. First, national balance sheets are combined with the related income flows. After this, income flows that are not property income but that are considered part of national income (e.g., wages and salaries) are added, the national income flows are broken down by institutional sector, and the household sector income flows separated. Finally, distributional household microdata are used to break down the aggregate household sector income flows by income decile. The article utilises this framework to analyse the evolution of rates of return and capital and labour shares, as well as the way in which the property income flows created by financial wealth have affected household primary income distribution.

Keywords: Functional distribution; Income distribution; National income; Households; Wealth (search for similar items in EconPapers)
JEL-codes: D10 D31 E21 G51 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:51:y:2023:i:3:p:858-879

DOI: 10.1016/j.jce.2023.02.006

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