Wealth among low-income households

The level of wealth among Norwegian low-income households is generally low. Compared to non-low-income households, they are less often house-owners and owners of shares and other financial assets. In general, most low-income households do not have much debt. Some households are, however, registered with a big amount of debt compared to their size of total household income. The share of highly indebted households is therefore bigger among low-income households than among other households.

Even though the amount of wealth is generally low among low-income households, the wealth distribution within this group is relatively skewed. This is because most low-income households have very little wealth, whereas a few have a substantial wealth. Some of these wealthy low-income households have relatively modest incomes but are classified as low-income households because their “after-tax” income is reduced after paying property taxes. Some low-income households are also self-employed households with huge deficits or negative property incomes due to losses that reduces their after-tax income. However, their level of wealth is relatively high.

In 2018, the share of private households (except student households) with low income in Norway was 14.2 per cent. If we add a condition of also having a low level of wealth, being so called «asset poor», the share of both income and asset poor households was 8 per cent in 2018. The share of both income and asset poor are especially big among households receiving social security benefits, households where the main income earner is long-term unemployed or is registered with reduced ability to work, and among households with a refugee background. The share of low-income and asset poor households is also relatively big among young people who are living alone, single parents and single persons receiving the minimum level of old-age pension or disability benefits.

Looking at the estimated current value of pension wealth, we find that this is lower among persons living in low-income households than in other households, especially among the older age-groups. However, pension wealth is relatively more equally distributed among households than estimated net wealth (financial and non-financial wealth, minus debt). In absolute numbers, however, pension wealth increases the difference in wealth between low-income households and other households.