Wealth Inequality: Opportunity for Me or for Others?

Michael Haliassos, Thomas Jansson and Yigitcan Karabulut

No 17237, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Early exposure to local wealth inequality and salient wealth transitions propagates both. Unique administrative data and a quasi-field experiment with exogenous assignment show that this exposure leads better-educated, but not less-educated, households to take financial, real-asset, and self-employment risks and move up the wealth distribution. We find little evidence for responses involving better-paying, more secure jobs, or human capital accumulation. Our findings point away from supply-side factors favoring wealth accumulation by the better-educated, and instrumental variable tests using asset-return-driven shocks to local wealth inequality strengthen this interpretation. Neighborhood-level analyses suggest local exposure and social transmission are the operative propagation mechanism.

Keywords: Household finance; Wealth inequality; Propagation of inequality; Education; Opportunity; Refugees (search for similar items in EconPapers)
JEL-codes: D1 D31 E21 E44 G5 (search for similar items in EconPapers)
Date: 2022-04
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