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Determinants of Household Position within Chilean Wealth Household’s Distribution

Felipe Martínez and Francisca Uribe

Working Papers Central Bank of Chile from Central Bank of Chile

Abstract: This paper analyzes the distribution of net wealth, its relationship with income and the factors that influence the household position within the wealth distribution in Chile. The research draws on microdata from the Survey of Household Finances 2014. We net wealth as the difference between assets and debts without considering pension wealth. The results show that wealth is unequally distributed among Chilean households. In fact, 73% of wealth is owned by the richest quintile. In addition, we show that to finance partial or totally the main residence with a subsidy has a significant effect on the probability of a household being above the lowest wealth quintile and that inheritances significantly increase the probability of belonging to a higher quintile of wealth. In terms of income we show that, even though it has a significant effect in the wealth position of a household, the relationship between income and wealth is weak.

Date: 2018-09
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