European Central Bank working paper estimates the first euro area joint distribution of household income and wealth

The European Central Bank published a Working Paper setting out a first multi-country framework to compile distributional national accounts that jointly cover household income and wealth for euro area countries in a way that is consistent with national accounts. The work extends the European System of Central Banks’ Distributional Wealth Accounts, an experimental quarterly dataset first released in January 2024. The paper links Household Finance and Consumption Survey microdata to Quarterly and Annual Sector Accounts, closes micro-macro “coverage gaps” using the Distributional Wealth Accounts adjustment toolkit including a Pareto-based correction for missing wealthy households, and constructs disposable income components using a mix of direct mappings and imputations based on proxies and balance sheet positions. Using the resulting linked dataset, it reports a strongly skewed distribution of both wealth and income, with wealth markedly more concentrated, and documents that capital-income components such as income from financial investments are much more unequally distributed than labour-related income. Illustrative joint-account indicators derived from the combined balance sheet and income data include broadly flat debt-to-income ratios across income deciles outside the lowest decile, more complex leverage patterns across wealth deciles, and gross return rates on financial investments that rise sharply with income. Robustness checks across alternative linkage and imputation choices leave headline distributional results largely unchanged, and a comparison with Eurostat distributional income accounts shows broadly similar shapes for most income distributions, with some differences concentrated in top and bottom deciles.