From Housing Gains to Pension Losses: New Methods to Reveal Wealth Inequality Dynamics in Chile

Bastián Castro Nofal, Ignacio Flores () and Pablo Cubillos
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Bastián Castro Nofal: UCHILE - Universidad de Chile = University of Chile [Santiago]
Ignacio Flores: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, ROMA TRE - Università degli Studi Roma Tre = Roma Tre University
Pablo Cubillos: UCHILE - Universidad de Chile = University of Chile [Santiago]

World Inequality Lab Working Papers from HAL

Abstract: This paper examines wealth inequality dynamics in Chile from 2007 to 2021, focusing on two key macroeconomic events: the sharp rise in housing prices after the introduction of a real estate value-added tax in 2016 and the substantial liquidation of pension assets through early withdrawals during the pandemic. We introduce a methodological innovation that aims to improve the measurement of wealth inequality by integrating administrative pension fund records into household wealth surveys using machine learning techniques. Our results reveal extreme levels of wealth concentration, with the top 10% holding approximately two-thirds of national private wealth. However, inequality slightly declined over the period, particularly after 2016, as the outcome of two opposing forces: housing appreciation, which benefited middle-class households, and pension fund withdrawals, which disproportionately reduced wealth at the lower end of the distribution.

Keywords: Fiscal policy and household wealth distribution; Pension funds (search for similar items in EconPapers)
Date: 2025-03
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-05046611v1
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