January 12, 2021
Written by WID.world

Wealth-Income Ratios in Switzerland

A Safe Harbor: Wealth-Income Ratios in Switzerland over the 20th Century and the Role of Housing Prices



In this paper, Enea Baselgia and Isabel Z. Martínez estimate the ratio of private wealth to national income for Switzerland over the period 1900–2018. The results indicate that the wealth-income ratio in Switzerland did not follow a U-shaped pattern as in most European countries. Instead, the evolution was extraordinarily stable, oscillating around 500% over most of the 20th century. However, the wealth-income ratio has been on the rise since the turn of the century to reach the unprecedented level of 721%. This considerable increase is mainly driven by large capital gains in housing wealth since 2010. The authors present new cross-country evidence that capital gains in housing wealth have become an important driver of rising wealth-income ratios in a series of developed economies.


Key findings



  • The Swiss private wealth-income ratio is best described by a J-shaped pattern: a stable evolution over the 20th century, followed by a very steep increase in recent years (see Fig. 1).
  • In the period 2010-2018, housing wealth alone grew by more than the equivalent of one year of national income. About half of this increase is attributable to the increase in real estate prices (see Tab. 2).
  • House price appreciation is systematically correlated with wealth-income ratios: a 1% increase in real house prices is associated with a 0.31 % increase in private wealth-income ratios. While the effect is rather weak in Switzerland, it is particularly strong in Norway, France, the U.S., and Spain (see Tab. 3 and Fig. 11).
  • While like in all other industrialized capitalist economies, public wealth in Switzerland represents a small fraction of total wealth, the public wealth to national income ratio has been rising in Switzerland since the beginning of the 21st century. This stands in contrast to other countries’ experiences (see Fig. 4 and Fig. B7).





This figure shows  the evolution of wealth-income ratios for Switzerland, Spain, Sweden and the United States

Wealth-Income Ratios in Switzerland






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