Decomposing wealth inequality in Australia 2006 - 2018
Melbourne Institute Working Paper No. 13/24
Date: December 2024
Author(s):
Abstract
This paper examines dynamics in household wealth inequality in Australia spanning nearly two decades, from years 2002-2018. We use the Household, Income and Labour Dynamics in Australia (HILDA) survey to document trends in household wealth and employ a decomposition analysis to estimate the contributions of socio-economic and demographic factors to changes in inequality. Our analysis shows that while overall inequality in net wealth remained largely unchanged, these masks contrasting trends across the wealth distribution and between property and financial assets. We detect evidence of a ‘disappearing middle,’ with the wealth position of middle-income households deteriorating relative to both the rich and poor. The decomposition analysis highlights the degree to which declining homeownership rates exacerbate wealth inequality, and the countervailing influences of population aging and rising human capital. These findings illustrate how societal changes over two decades, in particular Australia’s worsening housing affordability challenges, are reshaping wealth inequality in Australia.