Abstract

How wealth, income and consumption are jointly distributed is important to assess the levels and trends in inequality in households’ resources. Due to data limitations, previous literature mainly focuses on inequality in at most two dimensions. The goal of this paper is to empirically estimate the joint distribution of income, consumption and wealth. We use micro-data from three waves of the Panel on Household Finances for Germany. While wealth and income are directly collected in the wealth survey, total consumption is calculated using information on net income and (active) savings flows. We find that net wealth is much more unequally distributed than income and consumption. The income and consumption distributions are more closely linked than the wealth and consumption distribution. Another finding is that the joint distribution of net wealth, net income and total consumption overlap stronger at the bottom of the distribution than at the top. These results improve our understanding of inequality in the largest Euro area economy and furthermore add new dimensions to measuring inequality which has been impeded by data limitations in the past.