The Nativity Wealth Gap in Europe: a Matching Approach | Munich Center for the Economics of Aging - MEA


01.09.2015 - 31.12.2019 / Social Policy and Old Age Provision

The Nativity Wealth Gap in Europe: a Matching Approach

This paper seeks to answer the question of how older migrants fare financially with respect

to natives. The paper uses SHARE data and exploits a matching method to provide a first estimate of the nativity wealth gap between older native and immigrant (or mixed) households in Europe, across their wealth distribution. This approach does not require to impose any functional form on

wealth and avoids validity-out-of-the-support assumptions; besides, it allows to estimate not only the mean of the wealth gap but also its distribution for the common-support sub-population. The results confirm that the average gap may be misleading: although it is positive and significant, the distribution of the gap reveals that immigrant households in the upper part of the wealth distribution are better-off, and those in the lower part of the wealth distribution are worse-off, than comparable native households. The characteristics of the former group suggest a potential role of cultural and geographic vicinity, and of the rules for economic integration in the EU, in favouring the formation of a wealth advantage. However, the presence of a majority of households experiencing a positive gap suggests the existence of social and institutional factors dampening wealth accumulation, especially for those migrating from outside Europe and with a poorer family background. A detailed decomposition analysis is also proposed, which reveals the crucial role of early childhood conditions.

The paper has been presented at the Spring Meeting of Young Economists (Halle, 2017) and at the Royal Economic Society annual conference (Bristol, 2017).

Contact Person(s)

Dr. Irene Ferrari