Income and Wealth Volatility: Evidence from Italy and the U.S. in the Past Two Decades
Income volatility and wealth volatility are central objects of investigation for the literature on income and wealth inequality and dynamics. Here we analyse the two concepts in a comparative perspective for the same individuals in Italy and the U.S. over the last two decades. Contrary to our expectations, we find that in both countries wealth volatility reaches significantly higher values than income volatility, the effect being mostly driven by changes in the market value of real estate assets. We also show that there is more volatility in both dimensions in the United States and that the overall trend in both countries is increasing over time. We conclude by exploring volatility in consumption.
D’Ambrosio and Menta gratefully acknowledge financial support from the Fonds National de la Recherche Luxembourg (Grants C18/SC/12677653 and 10949242). The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.