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Financial volatility and the evolution of wealth inequality in Europe: toward a typology of wealth inequality scenarios

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Listed:
  • Michel Forsé

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • Mathieu Lizotte
Abstract
The study of wealth inequality poses some unique challenges that do not present themselves when studying income inequality. The main challenge is that the value of wealth is in constant flux and the net positive or negative variations across the different segments of the wealth distribution will have an impact on both wealth inequality and the welfare of households. While the volatility in financial markets is well known, its implications on wealth inequality deserve to be analyzed in greater detail. The objective of this study is to determine the consequences of financial volatility on both wealth inequality and household welfare in selected European countries. In order to properly grasp the impact of financial volatility on the distribution of wealth, we propose a typology of wealth inequality scenarios that incorporates changes in both relative wealth inequality and the absolute welfare of households. The scenario approach offers a synthetic way of understanding how the distribution of wealth changes over a given time period.

Suggested Citation

  • Michel Forsé & Mathieu Lizotte, 2019. "Financial volatility and the evolution of wealth inequality in Europe: toward a typology of wealth inequality scenarios," Post-Print hal-03643238, HAL.
    • Handle: RePEc:hal:journl:hal-03643238
    DOI: 10.4000/ress.5630
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03643238
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    References listed on IDEAS

    as
    1. Brenda Spotton, 1997. "Financial Instability Reconsidered: Orthodox Theories versus Historical Facts," Journal of Economic Issues, Taylor & Francis Journals, vol. 31(1), pages 175-196, March.
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    3. Hyman P. Minsky, 1992. "The Financial Instability Hypothesis," Economics Working Paper Archive wp_74, Levy Economics Institute.
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