Anatomy of the Global Saving Glut

Anatomy of the Global Saving Glut

In this paper, Luis Bauluz, Filip Novokmet and Moritz Schularick provide a distributional perspective on global saving and wealth accumulation since the 1980s. They calculate saving flows and capital gains across the wealth distribution for the G3 economies – the U.S., Europe, and China. This allows them to identify which households shaped the “Global Saving Glut”, finding a marked increase in saving by the global rich (driven by corporate saving) and a decline for the middle classes.  All else equal, in the absence of significant capital gains in housing, the rising inequality of savings would have led to a significantly higher concentration of wealth.

4 key findings

• The years 1980 to 2018 witnessed a marked increase in the inequality of household saving in all G3 economies: around 1980 the top-10% accounted for around 60% of all household saving rising to about 90% in 2018.
• The most important source for the surge in top-10% saving was the secular rise of global corporate saving whose ultimate owners are the rich households.
• Saving flows played the key role for wealth accumulation of the top-10% and capital gains in housing for middle-class households across the G3 economies.
• Without meaningful saving or capital gains, the wealth share of the bottom half of the population declined in most G3 economies.

Figure: G3 net national saving decomposition, 1980-2018

This figure shows the development of the G3 top 10%, bottom 90% and government saving. G3 (U.S., China and Europe) saving is the combination of top 10%, bottom 90% and government saving in the U.S., China and Europe. G3 saving is scaled by G3 national income. Cross-country combinations use market exchange rates to convert local currencies into US dollars. Series are 5-year moving averages.

Authors

• Luis Bauluz (University of Bonn, World Inequality Lab)
• Filip Novokmet (University of Bonn, World Inequality Lab)
• Moritz Schularick (University of Bonn, Sciences Po)

Media Contact

• Olivia Ronsain: olivia.ronsain@psemail.eu; +33 7 63 91 81 68