Decomposing household wealth portfolios across countries: An age-old question?

Using harmonized wealth data and a novel decomposition approach, we show that cohort effects exist in the income profiles of asset and debt portfolios for a sample of European countries, the U.S. and Canada. We find that younger households’ participation decisions in financial assets are more responsive to their income than older households. This result has implications for policy setting during times of financial unease. Additionally, younger households’ participation decisions respond more to to the institutional setting than mature households. By contrast, the level of wealth, given participation varies more in response to characteristics and institutions for the older cohort than the younger one. These findings have important implications, indicating a scope for policies which promote participation for young households and which promote optimal portfolio allocation for mature households.