Heterogeneity in Returns to Wealth and the Measurement of Wealth Inequality

Luigi Guiso, Luigi Pistaferri, Andreas Fagereng and Davide Malacrino

No 11047, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Lacking a long time series on the assets of the very wealthy, Saez and Zucman (2015) use US tax records to obtain estimates of wealth holdings by capitalizing asset income from tax returns. They document marked upward trends in wealth concentration. We use data on tax returns and actual wealth holdings from tax records for the whole Norwegian population to test the robustness of the methodology. We document that measures of wealth based on the capitalization approach can lead to misleading conclusions about the level and the dynamics of wealth inequality if returns are heterogeneous and even moderately correlated with wealth.

Keywords: Heterogeneity; Returns to wealth; Wealth inequality (search for similar items in EconPapers)
JEL-codes: E13 E21 E24 (search for similar items in EconPapers)
Date: 2016-01
New Economics Papers: this item is included in nep-eec, nep-mac and nep-pbe
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Citations: View citations in EconPapers (87)

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Journal Article: Heterogeneity in Returns to Wealth and the Measurement of Wealth Inequality (2016)
Working Paper: Heterogeneity in Returns to Wealth and the Measurement of Wealth Inequality (2016)
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