Individualization of wealth accentuates male-female inequalities

In the last 20 years, wealth has become increasingly individualized in France, due to both an increase in the share of wealth owned by singles and increased individualization of asset-holding within couples (a rise in the proportion of assets owned individually rather than jointly). The latter phenomenon is due primarily to the fact that more and more couples are choosing the “separate” (rather than “community”) property” regime when they marry and, to a lesser extent, the fact that individual wealth  accumulated before marriage has increased. Using data from INSEE’s “Patrimoine” [Wealth] recurring survey, INED researcher Marion Leturcq and Nicolas Frémeaux, an associate professor at the University of Paris 2, show that standard measurement methods underestimate wealth inequalities because they do not take into account intra-household wealth inequalities, particularly disparities between men’s and women’s wealth.   

An individual’s wealth is made up of their financial, work-related, and real estate assets, which may be held in two distinct ways: as solely their own, or as jointly owned. Consider a couple married under the community property regime limited to assets acquired after marriage: here, assets acquired before marriage, together with wealth inherited after marriage, is not jointly owned. Partners wishing to keep their assets separate have two solutions: not to get married, or, in the case of marriage or civil union (the PACS in France), to establish a marriage contract that keeps assets separate. Our study shows that wealth individualization has increased in France in the last two decades. From 1998 to 2015, the proportion of wealth held by single persons rose from 21% to 27%, while over the same period the proportion of individually rather than jointly owned wealth within couples rose from 18% to 27%. How can this be explained. According to our results, 76% of the increase in the individually owned proportion of couple’s wealth is explained by their decision to choose a matrimonial regime that allows spouses to keep their assets separate. The remaining 24% of the increase is explained by inherited wealth and assets acquired before the couple was formed. As inherited wealth continues to grow, wealth individualization may well continue to rise over the next decades, leading to a greater increase in the proportion of individualized assets and in the probability that couples will prefer a matrimonial regime that keeps partners’ assets separate. 

The average wealth gap between men in women in France rose from 7000€ in 1998 to 24,500€ in 2015. This increase in absolute value is not due solely to an increase in average wealth over the period (from 78,000€ in 1998 to 150,000€ in 2015). In fact, when we divide the gap by average individual wealth measured for those same years, it rises from 9% of average individual wealth in 1998 to 16.3% in 2015. These findings are different from those of earlier studies based on the hypothesis that wealth was shared equally within couples. By taking into account the unequal distribution of wealth between men and women, our study shows sharply higher wealth gaps than when those gaps are measured conventionally by attributing half of a household’s wealth to each member of the couple. 

Where does this increasing wealth gap between men and women in France come from? Primarily from a change in matrimonial regime choices. Fewer and fewer couples choose to own the wealth acquired during their marriage jointly (that “community of wealth” regime is attributed by default to couples who choose not to establish a marriage contract). In other words, couples are less and less inclined to choose a legal marital regime that requires joint ownership of wealth acquired after the date of marriage. In particular, inequalities early in the unions of couples married or PACSed under a property regime that keeps their assets separate have deepened. In couples who choose not to unite assets even from before marriage, inequalities have deepened because women are less able to save than men. In direct contrast, wage differences between men and women whose assets are jointly owned do not result in differences in wealth accumulation because regardless of each partner’s financial contribution to the household, the couple’s wealth is owned jointly and equally by each of its members. 

This is the first study to reveal the increase in male-female inequalities in property and wealth ownership. Our results are important for public policy, especially in terms of income, wealth, and inheritance rights. A considerable number of public policies in France are based on the assumption that resources are shared equally within the household, independently of how income or capital is in fact “distributed” between the man and woman. We may hope that the increasing individualization of asset ownership in France may lead national public authorities to reconsider how those policies are implemented. 

Source : Nicolas Frémeaux et Marion Leturcq, 2020, "Inequalities and the individualization of wealth", Journal of Public Economics 184: 1-18

Mise en ligne : juin 2020