Wealth-income ratios in a small, open economy: The Netherlands, 1854-2019

We construct and analyze household wealth and its composition for The Netherlands since 1854. The household wealth-income ratio followed the familiar U-shaped pattern over the 20th century. The wealth-income ratio increased in the 19th century, driven by industrialization and booming private foreign investments, to a peak of 700% around 1880. In contrast to other countries, the wealth-income ratio remained high up until 1929. We construct the first series on colonial wealth in the literature and show that colonial and other foreign investment account for most of the gap with other countries in the pre-WWII period. The initial post-war decline of the ratio is driven by rapid income growth. The increase in the ratio since the 1970s has been mainly driven by the large capital-funded pension system. Housing plays only a secondary role in net wealth accumulation due to significant mortgage debt.