Eleni Karagiannaki

Wealth in the UK: distribution, accumulation, and policy

This book examines key issues connected with the distribution of personal wealth in the UK. It studies why wealth is now such an important factor in social differences and public policy. It presents the most recent information on current wealth inequalities and a detailed discussion of trends in the distribution of wealth. It uses newly available data to compare wealth inequalities in the UK with the USA, Canada, and Sweden. It uses longitudinal data, which track the same people over time, to examine trajectories in wealth accumulation over the decade to 2005 and inequalities in inheritances over the same period. It looks at how parental wealth levels and peoples asset-holdings early in adulthood affect outcomes later in their lives. The final part looks at the way in which policies towards wealth-holding developed historically, and the contradictory ways in which a wide range of public policies relate to peoples wealth levels, including through taxation, means-testing, and the encouragement of saving, and discusses what the key issues for policy towards wealth and wealth inequalities now are. Personal wealth in the UK totalled L5.5 trillion by 2010 (L9-10 trillion if occupational pension rights are included). Inheritance flows are now equivalent to 4 per cent of national income each year. All households in the wealthiest tenth have more than 75 times the wealth of any of those in the bottom tenth. Absolute differences in wealth levels have increased substantially over the last 15 years, so wealth differences represent many more years of income than in the past. This makes them of great importance to life chances. This makes the book highly relevant for public policy, but also for academic and student understanding of a crucial dimension of social difference. As well as bringing together existing information on the area, the book contains considerable new analysis on wealth inequality, inheritance, and their impacts, drawing on work which is at the forefront of recent research. Contributors to this volume - John Hills John Hills and Francesca Bastagli Frank Cowell Francesca Bastagli and John Hills Eleni Karagiannaki and John Hills Abigail McKnight and Eleni Karagiannaki Howard Glennerster John Hills and Howard Glennerster John Hills and Howard Glennerster

Exploring the Effects of Integrated Benefit Systems and Active Labour Market Policies: Evidence from Jobcentre Plus in the UK

In April 2002 Jobcentre Plus started to operate in the UK bringing together the service of the Benefits Agency and the Employment Service. Offering a fully integrated benefit claiming and work placement/job-seeking service for people of working age this new organisation aims to strengthen the link between welfare and work. Due to the magnitude of the associated organisational change, the national roll-out of the new organisation is being implemented gradually over a transitional period ending in 2006. During this transitional period some local offices are fully integrated while others functions remain split between pre-existing Benefits Agency and Employment Service offices. In this paper we examine how changes in the level of integration (measured as the percentage of offices within districts offering the integrated Jobcentre Plus service) within districts over time affected performance with respect to job entry, benefit service and customer service delivery. Our analysis suggests that Jobcentre Plus has a clear positive effect on job entry outcomes for all client groups, a negative effect on business delivery while it has neither a positive nor a negative effect on customer service outcomes.

Recent Trends in the Size and the Distribution of Inherited Wealth in the UK

In this paper we document the evolution of the annual flow of inheritances in the UK during the period 1984-2005 and provide estimates for the overall magnitude and the distribution of inherited wealth. Our results indicate that the period under examination the annual flow of inheritance increased markedly, from £22 billion in 1984 to £56 billion in 2005. The main drivers behind this increase were the rise in house prices and to a lesser extent the increase in the proportion of inheritances which included housing assets. Our results, based on analysis of survey data, show that the distribution of inheritances is characterized by a very high degree of inequality (comparable by and large to that observed in personal wealth) and that this has increased over time. However, the inequality increasing effect from the greater inequality in the distribution of inheritance was counterbalanced by the increase in the percentage of the population who received an inheritance. Our results also show that inheritance is positively associated with socio-economic status and that the disparities between groups became slightly more pronounced over time (mainly across educational groups). However, our evidence also shows that inheritance for the majority of recipients is fairly small and that large inheritances are limited to a very small minority of the population.

Accounting for Cross-Country Differences in Wealth Inequality

This paper adopts a counterfactual decomposition analysis to analyse cross-country differences in the size of household wealth and levels of household wealth inequality. The findings of the paper suggest that the biggest share of cross-country differences is not due to differences in the distribution of household demographic and economic characteristics but rather reflect strong unobserved country effects.

The impact of inheritance on the distribution of wealth: evidence from Great Britain

Using the British Household Panel Survey, we investigate the role of inheritance in shaping the distribution of household wealth in Great Britain during 1995–2005a period characterized by a substantial increase in wealth and an equally important decrease in wealth inequality. Abstracting from behavioral effects, we find that inheritances received during this period accounted for 30 percent of the increase in wealth of inheritors. Regression estimates of the effect of inheritance on wealth accumulation suggest that households spend 30 percent of their inheritances on average, and that there is substantial heterogeneity in household responses. Households that accumulated more wealth saved a larger share of their inheritances, as did middle aged households and those with lower initial wealth. Although inheritances are highly unequal they had a small impact on overall wealth inequality. This mainly reflected the fact that their size relative to other sources of wealth was very small.