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Does Income Risk Affect the Wealth Distribution?

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  • Matthias Krapf

    (University of Basel and CESifo)

Abstract

A substantial literature considers insurance against greater income risk among high-income earners a driver of the unequal distribution of wealth. Using detailed tax data from a Swiss canton, I examine this mechanism empirically. While I confirm that measures of income risk vary along the income distribution, I find little evidence for a systematic link between income risk and wealth accumulation. Taxpayers with negative net wealth are of particular importance in the accumulation process. They tend to have high incomes initially and experience large gains in wealth and income subsequently.

Suggested Citation

  • Matthias Krapf, 2023. "Does Income Risk Affect the Wealth Distribution?," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 49(4), pages 475-515, October.
    • Handle: RePEc:pal:easeco:v:49:y:2023:i:4:d:10.1057_s41302-023-00249-y
    DOI: 10.1057/s41302-023-00249-y
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    1. Häner-Müller, Melanie & Salvi, Michele & Schaltegger, Christoph A., 2024. "Marry into new or old money? The distributional impact of marital decisions from an intergenerational perspective," Journal of Economic Behavior & Organization, Elsevier, vol. 224(C), pages 672-687.
    2. Burgherr, David, 2022. "Behavioral Responses to a Pension Savings Mandate : Quasi-experimental Evidence from Swiss Tax Data," CAGE Online Working Paper Series 645, Competitive Advantage in the Global Economy (CAGE).

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