JRC B2 Seminar: “Wealth Inequality Dynamics in Europe and the United States: Understanding the Determinants” – Clara Martínez-Toledano


This paper studies the interaction between the long-term dynamics of aggregate household wealth and the wealth distribution in Europe and the United States. We do so by building the first Distributional Wealth Accounts for Europe, including households’ assets, liabilities, investment flows, and the wealth distribution for most European countries from 1970–2020. We find that although aggregate household wealth to income ratios have followed a similar increasing pattern in both Europe and the United States since 1970, wealth concentration has increased much faster in the United States. Using wealth accumulation decompositions and counterfactual simulations, we show that the weaker rise in labor income inequality and the stronger rise in house prices relative to financial assets in Europe versus the United States seem to explain why Europe has experienced a more moderate rise in wealth concentration since the mid-1980s.


Clara Martínez-Toledano is an Assistant Professor of Financial Economics at the Imperial College London, and Wealth Distribution Coordinator at WID.world. Before joining Imperial, she was a Postdoctoral research scholar at Columbia Business School. Her research interests are on household and public finance. Recent work focuses on understanding the determinants of wealth accumulation and wealth inequality dynamics within and across countries.