Ederer/Rehm (2020b) empirically calibrated long-run equilibrium wealth distribution for ten European countries, mainly using 2010 Household Finance and Consumption Survey (HFCS) data. Measuring wealth inequality through the capitalists’ share of wealth, they find that seven out of ten countries deviate from Piketty’s (2014) prediction that under the condition of r > g wealth distribution will become ever more unequal. With the actual capitalists’ share in 2010 below the calibrated equilibrium, however, they forecast increasing wealth inequality. Our research extends this analysis in two ways. Firstly, using the 2010, 2014, 2017, and 2021 HFCS data, we recalibrate the equilibrium based on 2010 data and track the capitalists’ share of wealth over the decade. We observe convergence tendencies towards the stable long-run equilibrium in some but not in all countries. Secondly, we expand the Ederer/Rehm (2020b) model to include real estate assets and mortgage debt. Recalibrating the long-run equilibrium for this extended model using 2010 values produces a similar pattern: For three countries, Piketty’s prediction holds, while for the remaining seven the equilibrium capitalists’ wealth share is lower than 100 per cent. The extended model shows a much lower actual capitalists’ share of wealth, supporting the idea that real estate assets, adjusted for mortgage debt, are more equally distributed than other types of wealth. Wealth inequality for the extended model is also predicted to rise. Based on 2014, 2017 and 2021 HFCS data, we indeed find a convergence of actual wealth distribution towards the stable long-run equilibrium for some, but not for all countries. In several countries, the stable long-run equilibrium distribution itself varies over time, partly in line with actual distribution which points to potential endogeneity of the former towards the latter. The channels remain to be explored.
Keywords: Wealth distribution, post-Kaleckian model, model calibration
JEL classification: D31 E12 E21
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