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Wealth accumulation in Great Britain 1995-2005: the role of house prices and the life cycle

Bastagli, Francesca and Hills, John (2012) Wealth accumulation in Great Britain 1995-2005: the role of house prices and the life cycle. CASEpapers, CASE/166. Centre for the Analysis of Social Exclusion, London School of Economics and Political Science, London, UK.

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Abstract

This paper examines trends in the distribution of household wealth in Great Britain from 1995 to 2005 using the British Household Panel Survey (BHPS). The data show that wealth is very unevenly distributed and reveal a widening absolute gap over the period between wealthier households and those with no or negative wealth. However, in relative terms, wealth grew fastest for households in the middle of the distribution and inequality measured by the Gini coefficient decreased. This mainly reflected housing wealth becoming a greater share of total net worth, more equally distributed, and the highest percentage increase in housing wealth taking place in the middle of the distribution. To estimate the distributional impact of the remarkable rise in house prices which defined this period, we simulate the distribution of net 2005 wealth in the hypothetical scenario in which house prices remained at their 1995 levels in real terms and find that the reduction in wealth inequality is almost entirely accounted for by changes in house prices. The paper also finds that, controlling for factors such as age, households that gained most from the house price boom were mortgagors, in particular those that were initially wealthier, and were advantaged in other ways such as by level of educational qualification.

Item Type: Monograph (Other)
Official URL: http://sticerd.lse.ac.uk/case
Additional Information: © 2012 The Authors
Library of Congress subject classification: H Social Sciences > HN Social history and conditions. Social problems. Social reform
Journal of Economic Literature Classification System: D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions
Sets: Departments > Social Policy
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Research centres and groups > Centre for Analysis of Social Exclusion (CASE)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: CASE/166
Date Deposited: 01 Aug 2013 11:11
URL: http://eprints.lse.ac.uk/51286/

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