Wealth differences across borders and the of real effect estate price dynamics: Evidence from two household surveys

Content Crossing borders, be it international or regional, often go togther with price wage or indeed wealth discontinuities. This paper identifies substantial wealth differences between Luxembourg resident households and cross-border commuter households despite their similar incomes. The av-erage (median) net wealth difference is estimated to be €367,000 (€129,000) and increases for higher percentiles. Using several different regression and decomposition techniques, spatial (regional) dif-ferences in real estate price developments, and thus differences in accumulated nominal capital gains are shown to be one main driving factor for these wealth differences. Other factors contribut-ing to the observed wealth differences are differences in age, income, education and other house-hold characteristics.