Wealth and income inequality in the long run

Arbeitspapier

This paper analyses the joint long-run evolution of wealth and income inequality. We show that top wealth and income shares were cointegrated over the past century in France and the US. We rationalise this finding using a two-agent version of the Solow growth model. In this framework, the co-movement of top wealth and income shares is determined by the relative saving rate at the top, i.e. the ratio of the saving rate of rich individuals to the aggregate saving rate. The cointegration finding suggests that relative saving rates at the top are fairly stable over time, thus explaining the tight co-movement between top wealth and income shares over the past century

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Economics Working Paper Series ; No. 2022/02

Classification and Topics

• Classification: Wirtschaft ; Personal Income, Wealth, and Their Distributions ; Macroeconomics: Consumption; Saving; Wealth ; Aggregate Factor Income Distribution ; Economic History: Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy: U.S.; Canada: 1913- ; Economic History: Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy: Europe: 1913-
• Subject: Income inequality ; wealth inequality ; top shares ; saving rates ; cointegration ; error correction

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lieberknecht, Philipp ; Vermeulen, Philip
• Event: Veröffentlichung
• (who): Auckland University of Technology (AUT), Faculty of Business, Economics and Law
• (where): Auckland
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/262204
• Last update: 10.03.2025, 11:44 AM CET