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Accounting for Wealth Concentration in the US

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  • Kaymak, Barıș

    (University of Montreal)

  • Leung, David

    (McGill University)

  • Poschke, Markus

    (McGill University)

Abstract

The recent literature has argued for high concentration of earnings, differences in rates of return on assets and bequests as potential determinants of the high level of wealth concentration in the US. Analyzing the joint distribution of earnings, capital income and net worth, we find evidence for excess returns on investment among the highest income groups. Nonetheless, concentration of labor earnings is the primary source of wealth concentration in the US. This finding reflects the high correlation between earnings and wealth in the data, as well as the fact that earnings are a major source of income for top income and wealth groups.

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  • Kaymak, Barıș & Leung, David & Poschke, Markus, 2020. "Accounting for Wealth Concentration in the US," IZA Discussion Papers 13082, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp13082
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    1. Ram Singh, 2022. "Do the Wealthy Underreport their Income? Analysing Relationship between Wealth and Reported Income in India," Working papers 331, Centre for Development Economics, Delhi School of Economics.

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    More about this item

    Keywords

    wealth inequality; rate of return heterogeneity; income risk; bequests;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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