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Household finance and income inequality in the euro area

The size and composition of assets and liabilities of households differ vastly across the income distribution in euro area countries. This paper shows that differences between income groups in household finance on both sides of the balance sheet contribute to income inequality. The distribution of h...

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Bibliographic Details
Main Author: Denk, Oliver
Other Authors: Cazenave-Lacroutz, Alexandre
Format: eBook
Language:English
Published: Paris OECD Publishing 2015
Series:OECD Economics Department Working Papers
Subjects:
Economics
Euro Area
Online Access:
Collection: OECD Books and Papers - Collection details see MPG.ReNa
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520 |a The size and composition of assets and liabilities of households differ vastly across the income distribution in euro area countries. This paper shows that differences between income groups in household finance on both sides of the balance sheet contribute to income inequality. The distribution of household credit is two times as unequal and the distribution of stock market wealth four times as unequal as the distribution of household income. Larger credit and stock markets may thus widen income inequality by providing people with high incomes with better investment opportunities and raising the returns on their savings. In addition, financial institutions help people protect their consumption against temporary changes in their income. But they do so unevenly across the distribution, as a household is more likely to be denied credit if it has a low income. No evidence is found of discrimination in credit provision against women or immigrants 

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