Grappling with Europe's wealth gap

Mary McCaughey (00:00:32:00 – 00:02:27:00): Hello and welcome to this edition of Eurofound Talks. Today, we're going to be talking about inequality – particularly wealth inequality. There are many issues at play when we talk about inequalities in wealth. Here today, we have two researchers who know more about it than most, and we look forward to discussing that with them.

Social mobility and the possibility of making a better life are something we discuss regularly – it really goes to the heart of the European project. The European project was about upward convergence of living standards – seeing us all prosper together. As we've seen from Eurofound’s latest Working Conditions Survey, wages and general working conditions have improved. This is a good thing.

We’ve seen upward convergence across the EU for many years – the ‘convergence machine’ was working effectively. Of course, it suffered setbacks during the Great Recession and COVID, but it is beginning to recover. However, wealth inequality remains a persistent issue. A new report, Unequal wealth, puts the spotlight on the role of housing – an issue we’ve explored often in Eurofound research. Housing is particularly important when we look at generational differences and an ageing population across Member States. For many young people, home ownership – and building wealth through housing – seems increasingly unattainable. This could mean that wealth inequality becomes even more entrenched in the coming decades.

I’m very happy to be joined today by Carlos Vacas and Esther Sándor, two of Eurofound’s leading researchers in this area. Welcome to both of you.

Carlos Vacas (00:02:51:00 – 00:02:52:00): Hello.

Esther Sándor (00:02:52:00 – 00:02:52:30): Hello.

Mary McCaughey (00:02:53:00 – 00:03:04:00): Carlos, let’s start with you. When we talk about wealth distribution, how does it compare to income distribution?

Carlos Vacas (00:03:04:00 – 00:04:30:00): We can clearly say that wealth is much more unequally distributed than income. To put it in numbers – we use an index called the Gini Index, which ranges from 0 (total equality) to 100 (total inequality). Across European countries, wealth inequality scores range from about 50 to 70, while income inequality scores range from about 20 to 40 – roughly half the level.

Mary McCaughey (00:04:30:00 – 00:04:31:00): So wealth inequality is roughly double the magnitude of income inequality?

Carlos Vacas (00:04:31:00 – 00:05:26:00): Exactly. It makes sense if we consider what we’re measuring – wealth captures assets (like houses, savings, investments), whereas income measures flows (wages or returns in a given year).

Mary McCaughey (00:05:26:00 – 00:06:01:00): Which explains why housing is such a critical issue in this area, given rising costs across the EU. Thanks, Carlos – that helps clarify the difference. So, when we talk about wealth inequality, what are the main driving factors? You’ve mentioned housing – are there others?

Carlos Vacas (00:06:01:00 – 00:07:03:00): Housing is by far the main component of wealth – around two-thirds of total household wealth in the EU comes from housing. Other elements include investments and savings, but housing dominates. We’ve seen housing drive increases in wealth inequality in countries such as Spain, Slovenia, and Greece over the past decade.

Mary McCaughey (00:07:44:00 – 00:08:00:00): Is that due to home ownership patterns – in some countries people buy, in others they rent – or is it mainly about cost?

Carlos Vacas (00:08:00:00 – 00:09:23:00): Both. Housing can actually reduce inequality where home ownership rates are high – as in Slovakia, Czechia, Malta, or Slovenia – but increase it where renting is more common, such as in Germany or Austria.

Mary McCaughey (00:09:23:00 – 00:09:27:00): So, home ownership acts as a protective factor?

Carlos Vacas (00:09:27:00 – 00:10:12:00): Yes. It can moderate inequality in some contexts.

Mary McCaughey (00:10:12:00 – 00:10:27:00): Looking at different Member States, where do we see the biggest divides?

Carlos Vacas (00:10:27:00 – 00:12:21:00): We can see a geographical divide: the highest wealth inequality is found in Germany, Spain, and Ireland – mostly Western European countries – while lower levels appear in Slovakia, Poland, and Czechia, largely newer Member States.

Mary McCaughey (00:12:21:00 – 00:12:23:00): Esther, you wanted to add something there?

Esther Sándor (00:12:23:00 – 00:13:10:00): Yes. In Eastern European countries, much of the lower inequality stems from historical factors. In the 1990s, when housing markets opened, many citizens could buy their previously state-owned homes at low prices – creating broad home ownership and smaller wealth gaps.

Mary McCaughey (00:13:10:00 – 00:13:27:00): That’s fascinating. When we look at countries with high inequality, how does that relate to their overall living standards?

Carlos Vacas (00:13:27:00 – 00:14:18:00): Generally, wealthier Western European countries tend to have higher wealth inequality, while newer, less wealthy Member States often show lower inequality.

Mary McCaughey (00:14:18:00 – 00:14:26:00): And in countries like Ireland, where housing plays such a big role?

Carlos Vacas (00:14:26:00 – 00:14:31:00): Housing is certainly a major factor there as well.

Mary McCaughey (00:14:31:00 – 00:15:01:00): Let’s talk about the wealthiest people – the top 5%. How much do they actually own?

Carlos Vacas (00:15:01:00 – 00:16:27:00): Across Europe, the top 5% own about 35% of total wealth, while the bottom 50% own only 9%. In some countries, such as Germany or Spain, the top 5% own 40%, while the bottom half owns just 4%.

Mary McCaughey (00:16:27:00 – 00:16:47:00): That’s extraordinary. Surely redistribution policies could address some of this imbalance?

Carlos Vacas (00:16:47:00 – 00:17:24:00): In theory, yes – but redistribution through tax and benefits mainly affects income, not wealth. Wealth often accumulates and transfers across generations, with limited correction through policy.

Mary McCaughey (00:17:24:00 – 00:17:42:00): So inheritance and tax policies could be part of the solution.

Carlos Vacas (00:17:42:00 – 00:17:48:00): Indeed – though few countries apply robust wealth taxes.

Mary McCaughey (00:17:48:00 – 00:18:06:00): Esther, how does EU wealth inequality compare to other developed countries like the US, Canada, or Japan?

Esther Sándor (00:18:06:00 – 00:19:14:00): The pattern is similar globally: wealth is far more unequally distributed than income. Across OECD countries, the top 10% own around 52% of total wealth, while the bottom 60% hold just over 12%. The US is an outlier – the top 10% own about 79% of national wealth, and the top 1% alone own over 40%.

Mary McCaughey (00:20:19:00 – 00:20:31:00): So the EU fares somewhat better?

Esther Sándor (00:20:31:00 – 00:21:11:00): Yes – similar to Canada, Japan, and the UK, but with significant variation between Member States. Housing differences largely explain this diversity.

Mary McCaughey (00:21:11:00 – 00:21:33:00): And what about generational divides – are younger people losing ground?

Esther Sándor (00:21:33:00 – 00:22:44:00): Yes. The intergenerational wealth gap is widening. Wealth peaks at ages 55–64, then declines, but younger people under 35 have far less – mostly tied up in their homes, if they own one at all. Inheritance plays a major role – those who receive it continue to build wealth faster than those who don’t.

Mary McCaughey (00:22:44:00 – 00:23:02:00): That suggests long-term inequality becomes embedded in society. How can we address that?

Esther Sándor (00:23:02:00 – 00:24:30:00): It’s multifaceted. High rents prevent young people from saving for a home, while older or wealthier people can invest long-term. We need to ease rental burdens and improve access to asset-building opportunities. Absolutely. Wealth influences not only education, but also health and political power – reinforcing advantage across generations.

Carlos Vacas (00:24:56:00 – 00:26:46:00): And again, housing is central. The coming transfer of baby boomer property wealth could either widen or reduce inequality – depending on national contexts and housing markets.

Mary McCaughey (00:26:46:00 – 00:27:38:00): Do we see other divides – for example, gender? And wealth inequality also affects other groups – single parents, migrants, and those with disabilities – compounding disadvantage.

Esther Sándor (00:27:16:00 – 00:29:23:00): Yes, even when controlling for education, men hold more wealth than women in almost every country. First, greater transparency – requiring wealth declarations linked to taxation could improve data and redistribution. Second, invest in affordable rental and social housing to reduce rent burdens and enable savings. Third, support the middle class – enabling them to build diversified assets beyond housing.

Mary McCaughey (00:30:55:00 – 00:31:43:00): Carlos, would you add anything? And rebuilding the middle class is also essential – giving people fair access to housing, healthcare, and education strengthens equality overall.

Carlos Vacas (00:31:20:00 – 00:32:17:00): I’d echo Esther’s points – particularly the need for more comprehensive wealth taxation, which very few countries currently apply. Exactly. Access to affordable housing has long been a marker of middle-class stability, but that’s slipping away. Expanding housing supply would ease market pressure and restore balance.

Mary McCaughey (00:33:53:00 – 00:35:14:00): Very insightful. For those who wish to learn more, the Unequal Wealth report is available online. There’s also extensive Eurofound research on housing, gender equality, job quality, and inequalities in working conditions. You can listen back to this episode on Spotify, Apple Podcasts, or wherever you get your podcasts. Visit our website, follow us on social media, and subscribe to our newsletter.