2019. Paper Website abstract bibtex
Wealth accumulation and its distribution are arguably two of the key drivers of overall economic inequality, and of major importance in their own right. However, relatively little is known about them, particularly in the developing world. In this article, for the first time, a wealth to income ratio series for Uruguay is constructed and wealth distribution is estimated, based on the capitalization method. The capital incomes database used is a combination of tax micro-data, firms’ tax records and household surveys, whilst aggregate national wealth is estimated based on a variety of data sources, since National Accounts’ balance sheets do no exist. Main estimations refer to 2009-2014 and are extended based on secondary sources to 2000-2015. Results show that the wealth to income ratio is around 380% and slowly decreasing, whilst wealth inequality decreased over the period but remains in very high levels. Between 35 and 45% of national wealth is owned by the wealthiest 1% and the top 10%’s share is over 60-65%. The middle 40% owns just above 30%, whilst the bottom 50’s share is only around 5%. Inequality estimations are triangulated with three other empirical approaches: a wealth household survey, personal wealth taxes and estimations based on the estate multiplier method, showing that wealth inequality estimations (both in level and trend) are consistent with these external evidence. The longer-run analysis indicates that negative growth episodes and capital gains have shaped the wealth to income ratio, which appears to be the driver of the changes in wealth distribution. These results are a part of a larger effort of Distributional National Accounts estimation for Uruguay and hence compatible with previous income distribution studies.