Determinants of Household Position within Chilean Wealth Household’s Distribution - Determinants of Household Position within Chilean Wealth Household’s Distribution - Central Bank of Chile
The Working Papers series of the Central Bank of Chile disseminates economic research conducted by Central Bank staff or third parties under the sponsorship of the Bank. The purpose of the series is to contribute to the discussion of relevant issues and develop new analytical or empirical approaches in their analyses. The only aim of the Working Papers is to disseminate preliminary research for its discussion and comments. Publication of Working Papers is not subject to previous approval by the members of the Board of the Central Bank. The views and conclusions presented in the papers are exclusively those of the author(s) and do not necessarily reflect the position of the Central Bank of Chile or of the Board members.
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This paper analyzes the distribution of net wealth, its relationship with income and the factors that influence the household position within the wealth distribution in Chile. The research draws on microdata from the Survey of Household Finances 2014. We de.ne net wealth as the difference between assets and debts without considering pension wealth. The results show that wealth is unequally distributed among Chilean households. In fact, 73% of wealth is owned by the richest quintile. In addition, we show that to finance partial or totally the main residence with a subsidy has a significant effect on the probability of a household being above the lowest wealth quintile and that inheritances significantly increase the probability of belonging to a higher quintile of wealth. In terms of income we show that, even though it has a significant effect in the wealth position of a household, the relationship between income and wealth is weak.