Wealth disparities between elderly immigrants and natives: a study of Estonia and Latvia

Liina Rebane (), Merike Kukk and Tairi Rõõm

No wp2024-4, Bank of Estonia Working Papers from Bank of Estonia

Abstract: Using data from the Household Finance and Consumption Survey, we examine the wealth gaps between native and immigrant populations in Estonia and Latvia. Additionally, we analyse the factors that may contribute to wealth disparities. Since most immigrants in the Baltic region are elderly people aged 60 years or more who migrated several decades ago, we focus on this age segment. It may be assumed that natives and immigrants in Latvia and Estonia started to accumulate wealth from similar starting positions at the beginning of the economic transition in the early 1990s, as owning real estate and business assets was not allowed in the Soviet Union. We apply unconditional quantile regressions based on a recentered influence function to estimate the wealth differences between natives and immigrants across the wealth distribution and use the Oaxaca-Blinder decomposition to decompose the raw gap into its explained and unexplained parts. Our estimations show that elderly natives are wealthier than immigrants even though homeownership rates are similar for both groups and immigrants among the elderly tend to be more educated than natives. The gaps in mean net wealth are of similar magnitude in Estonia and Latvia among the people aged 60 or older, with natives being on average about 40% wealthier than immigrants in both countries. Wealth disparities widen at the upper tail of the net wealth distribution, with a significant gap emerging around the median in Estonia and around the 90th percentile in Latvia. The factors contributing to the wealth gap are mostly similar in the two countries, but some differences emerge. In Estonia, self-employment business assets and inheritances play a significant role, whereas in Latvia, additional real estate ownership beyond primary residences contributes to the disparity.

Keywords: household wealth; nativity gap; inequality; immigration; Estonia; Latvia (search for similar items in EconPapers)
JEL-codes: D31 J15 R23 (search for similar items in EconPapers)
Date: 2024-06-17, Revised 2024-06-17
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