Net worth and the Middle Class: Patterns of Wealth and Debt, Before and After Financial Crisis

In this paper, we take the opportunity to examine wealth portfolios for the middle class and for various corresponding socio-economic groups. We identify the rich, at the top of the income distribution, the middle class (middle 80 percent) and the poor (bottom 20 percent). We examine several household types including the elderly, two parents with children and single parents. We also explore additional definitions of the middle class based on wealth and human capital. We consider comparable net worth, financial assets, occupational pension coverage, home ownership and net home value, and debts. In addition, we simulate the plausible effects of the financial crisis on selected wealth components and discuss its impact on household indebtedness. We use data for Italy, Luxembourg, Sweden, the US and the UK from the recently created Luxembourg Wealth Study (LWS) - a harmonized cross-national database on household assets and liabilities.