Published in
The Scandinavian Journal of Economics, Dec 2012, 114 (1), pages 24 - 54
DOI: 10.1111/j.1467-9442.2011.01662.x
Abstract
Differences in individual wealth holdings are widely viewed as a driving force of economic inequality. However, as this finding relies on cross-sectional data, a concern is that older is confused with wealthier. We propose a new method to adjust for age effects in cross-sections, which eliminates wealth inequality due to age, yet preserves inequality arising from other factors. Using a new cross-country comparable database, we examine the impact of age adjustments on wealth inequality across countries and over time. We find that the most widely used method yields a substantially different picture of age-adjusted wealth inequality than our method.
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