The Development of Richness in Europe

Abstract

In recent years, a branch of literature on the top of the (income) distribution emerged in Economics using top income shares as a measure of richness. This paper contributes to this literature by comparing different measures of richness (income shares, headcount, intensity measures). We analyse the development of various richness indices over time in Europe (and other OECDCountries) using micro data. We explain the different developments in different countries by taking country specific situations (institutions, distribution of resources) into account. Further on, we compare the findings between different richness indices to show their differences and similarities in evaluating the top of the income distribution. Our analysis yields the following results. Different data sources as well as different richness measures can lead to different results for cross country comparisons and rankings, the analysis of the development of richness over time. However, in general, different rather homogeneous groups of countries can be identified: richness is rather high in Southern and Eastern European countries, as well as the English speaking countries, medium in Continental Europe and low in Scandinavian countries.