IDEAS home Printed from https://ideas.repec.org/p/crs/wpaper/2025-09.html
   My bibliography  Save this paper

Unpacking Rising Inequality: The Roles of Markups, Taxes, and Asset Prices

Author

Listed:
  • Stéphane Auray

    (CREST-ENSAI and Rennes School of Business, Bruz, France)

  • Aurélien Eyquem

    (Department of Economics, University of Lausanne, Switzerland)

  • Bertrand Garbinti

    (CREST-ENSAE-Institut Polytechnique Paris, Palaiseau, France)

  • Jonathan Goupille-Lebret

    (CNRS and ENS de Lyon (CERGIC), France)

Abstract

We study the dynamics of income and wealth inequality using a heterogeneous-agent model that combines endogenous portfolio choice, a granular representation of the tax-andtransfer system, and a reduced-form mechanism linking markups to top incomes through entrepreneurial risk. Driven by changes in taxation, markups, and asset prices, the model accounts for the observed trends in income and wealth inequality in France since 1984, up to the top 1% income and wealth shares. We combine counterfactual simulations with a simple accounting decomposition of wealth accumulation to assess the contributions of these driving forces to inequality dynamics and to identify the channels through which they operate. We identify rising markups as the primary driver of income inequality, while all three forces– taxation, markups, and asset prices– contribute significantly to wealth inequality. Our findings highlight both the mechanical impact of differential asset price movements and the central role of endogenous saving responses in shaping wealth inequality over time.

Suggested Citation

  • Stéphane Auray & Aurélien Eyquem & Bertrand Garbinti & Jonathan Goupille-Lebret, 2025. "Unpacking Rising Inequality: The Roles of Markups, Taxes, and Asset Prices," Working Papers 2025-09, Center for Research in Economics and Statistics.
    • Handle: RePEc:crs:wpaper:2025-09
    as

    Download full text from publisher

    File URL: http://crest.science/RePEc/wpstorage/2025-09.pdf
    File Function: CREST working paper version
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:crs:wpaper:2025-09. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Secretariat General (email available below). General contact details of provider: https://edirc.repec.org/data/crestfr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.