Working Paper: CEPR ID: DP16660
Authors: Enea Baselgia; Isabel Z. Martínez
Abstract: We estimate the ratio of private wealth to national income, βpt, for Switzerland from 1900 to 2020. Our results indicate that over the 20th century, βpt did not follow a U-shaped pattern as in most European countries. Instead, it was exceptionally stable at around 500%. We argue that this consistently high βpt was the result of geopolitical factors combined with Switzerland’s capital friendly policymaking. Since the turn of the century, however, βpt has been on a rapid rise to reach 793% in 2020. This considerable increase is mainly driven by large capital gains, especially in housing wealth.
Keywords: wealth-income ratio; income distribution; economic growth; housing prices
JEL Codes: N34; D31; D33; E01
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| geopolitical factors (F52) | wealth-income ratio (pt) (D31) |
| capital-friendly policymaking (G31) | wealth-income ratio (pt) (D31) |
| capital gains (H24) | wealth-income ratio (pt) (D31) |
| rising housing prices (R31) | wealth-income ratio (pt) (D31) |
| low interest rates (E43) | capital gains (H24) |
| capital gains (H24) | rising housing wealth (R21) |
| absence of progressive taxation (H29) | wealth-income ratio (pt) (D31) |
| anti-capitalist policies (P16) | wealth-income ratio (pt) (D31) |