Asset composition of wealthy households in Australia: how does owning stocks and property assets contribute to the likelihood of being in the top wealth class?

Australia has experienced a persistent wealth gap between its wealthiest 20% of households and the rest of its population over the past two decades. Scholars have pointed to either the growing stock market or the property sector as a key explanation for the ongoing wealth gap. Rigorous empirical evidence can inform which assets the wealthiest 20% tend to own to a greater extent than the bottom 80% in wealth. This thesis contributes to this evidence by using data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey and by focusing on the differences between the wealthiest 20% and bottom 80% in their share of assets in equity, primary residence, and other property. It compares the asset composition between the two wealth classes, and also uses a logistic regression model and predicted probabilities to assess the relative contribution of each asset source to attaining top 20 % wealth membership. It finds that an increasing share of household assets in equity and other property assets increases the likelihood of being in the wealthiest 20%. In contrast, a growing share of assets in primary residence slightly reduces this likelihood. The findings will assist researchers on how the asset composition of households contribute to wealth stratification and will also assist policymakers in identifying ways to alleviate the wealth gap.