Does Income Risk Affect the Wealth Distribution?

Matthias Krapf

Eastern Economic Journal, 2023, vol. 49, issue 4, No 2, 475-515

Abstract: 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.

Keywords: Wealth distribution; Income risk; Saving behavior (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1057/s41302-023-00249-y

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