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Who Gets the Flow? Financial Globalisation and Wealth Inequality

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  • Simone Arrigoni

    (Department of Economics, Trinity College Dublin)

Abstract

This paper studies whether the advent of financial globalisation has contributed to increasing wealth inequality in the United States, France, and the United Kingdom. I find that (i) positive changes in the benchmark measure of financial globalisation are associated with a positive change in the top 1% and 10% wealth shares and a negative change in the wealth share of the bottom 50% of the distribution. This is equivalent to an average gain of $1 trillion for the top 10% and $1.6 trillion for the top 1%, over the period of interest. (ii) Portfolio equities and financial derivatives appear to be the driving components behind the increase in wealth share. (iii) The implied change in wealth shares is driven by the accumulation of new financial wealth (flow) rather than the valuation of existing one. (iv) The dynamic is strengthened when a banking crisis hits the economy, possibly because people at the top of the distribution can recover their lost wealth faster than people at the bottom.

Suggested Citation

  • Simone Arrigoni, 2022. "Who Gets the Flow? Financial Globalisation and Wealth Inequality," Trinity Economics Papers tep0322, Trinity College Dublin, Department of Economics.
    • Handle: RePEc:tcd:tcduee:tep0322
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    File URL: https://www.tcd.ie/Economics/TEP/2022/TEP0322.pdf
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    More about this item

    Keywords

    financialglobalisation; internationalfinancialintegration; wealth inequality;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F30 - International Economics - - International Finance - - - General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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