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Wealth Distribution and Social Mobility in the US: A Quantitative Approach

Jess Benhabib (), Alberto Bisin and Mi Luo

American Economic Review, 2019, vol. 109, issue 5, 1623-47

Abstract: We quantitatively identify the factors that drive wealth dynamics in the United States and are consistent with its skewed cross-sectional distribution and with social mobility. We concentrate on three critical factors: (i) skewed earnings, (ii) differential saving rates across wealth levels, and (iii) stochastic idiosyncratic returns to wealth. All of these are fundamental for matching both distribution and mobility. The stochastic process for returns which best fits the cross-sectional distribution of wealth and social mobility in the United States shares several statistical properties with those of the returns to wealth uncovered by Fagereng et al. (2017) from tax records in Norway.

JEL-codes: D31 E13 E21 E25 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/aer.20151684
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Handle: RePEc:aea:aecrev:v:109:y:2019:i:5:p:1623-47