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The Joint Distribution of Income and Wealth in Uruguay

Graciela Sanroman () and Guillermo Santos ()
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Graciela Sanroman: Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República
Guillermo Santos: Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República

No 717, Documentos de Trabajo (working papers) from Department of Economics - dECON

Abstract: This paper analyzes the joint distribution of income and wealth in Uruguay, and compares it to that of Chile, Spain and the U.S. using data from Surveys of Household Finances and Wealth. First, we analyze income and wealth separately and find that wealth is much more concentrated and notably more asymmetric than income. Afterwards, we provide non-parametric estimation of copulas for income and wealth. As expected, high income households are among the wealthiest, while low income households are mostly in the bottom of the wealth distribution, but dependence at the top is much stronger. Although this fact is observed in all the economies analyzed, by performing a test of equality between copulas we find that the pattern of dependence significantly varies across countries, except for the couple of Spain-Uruguay. Finally, we assess for the sources of income and wealth heterogeneity in Uruguay and conclude that education strongly influences income, wealth and the relationship between them. However, most of the wealth heterogeneity and some remarkable features of its relationship with income (in particular the peak at the top of the joint distribution) are not explained by the household characteristics commonly used to study income.

Keywords: income; wealth; inequality; copula; non-parametric estimation (search for similar items in EconPapers)
JEL-codes: C4 C31 D31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lam
Date: 2017-07
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