Wealth polarization in western countries

Abstract

This paper delves into the dynamics of wealth distribution across various countries, utilizing innovative methodologies to uncover patterns of wealth polarization and its determinants. Wealth, distinct from income, reflects long-term economic resources and serves as a crucial indicator of economic well-being. Employing the "relative distribution" method and Recentered Influence Function (RIF) regression, this study examines changes in wealth distribution and the factors driving wealth polarization across eight European countries, Australia, and the United States.

The analysis reveals significant heterogeneity in wealth distribution trends among countries, with disparities observed over time. Wealth polarization, akin to income polarization, emerges as a phenomenon distinct from traditional measures of inequality, shedding light on the concentration of wealth within societies. Household composition, demographic factors, and socioeconomic characteristics significantly influence wealth polarization, echoing patterns observed in income polarization studies.

The findings underscore the multifaceted nature of wealth distribution dynamics and highlight the need for comprehensive policy interventions to address wealth inequality and polarization. Policy measures such as progressive taxation, regulatory reforms, and asset-building programs for marginalized communities are crucial in fostering equitable wealth distribution and creating inclusive societies.