The Historical Evolution of the Wealth Distribution: A Quantitative-Theoretic Investigation / Joachim Hubmer, Per Krusell, Anthony A. Smith, Jr..

Format:

Book

Author/Creator:

Hubmer, Joachim.

Contributor:

National Bureau of Economic Research.

Krusell, Per.

Smith, Anthony A, Jr.

Series:

Working Paper Series (National Bureau of Economic Research) no. w23011.

NBER working paper series no. w23011

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Historical Evolution of the Wealth Distribution

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2016.

Summary:

This paper employs the benchmark heterogeneous-agent model used in macroeconomics to examine drivers of the rise in wealth inequality in the U.S. over the last thirty years. Several plausible candidates are formulated, calibrated to data, and examined through the lens of the model. There is one main finding: by far the most important driver is the significant drop in tax progressivity that started in the late 1970s, intensified during the Reagan years, and then subsequently flattened out, with only a minor bounce back. The sharp observed increases in earnings inequality, the falling labor share over the recent decades, and potential mechanisms underlying changes in the gap between the interest rate and the growth rate (Piketty's r-g story) all fall far short of accounting for the data.

Notes:

Print version record

December 2016.