Why Are the Wealthiest So Wealthy? A Longitudinal Empirical Investigation

Elin Halvorsen (), Joachim Hubmer (), Serdar Ozkan and Sergio Salgado Ibáñez
Additional contact information
Elin Halvorsen: https://www.ssb.no/en/forskning/ansatte/elin-halvorsen
Joachim Hubmer: https://economics.sas.upenn.edu/people/joachim-hubmer

No 2023-004, Working Papers from Federal Reserve Bank of St. Louis

Abstract: We use 1993–2015 Norwegian administrative panel data on wealth and income to study lifecycle wealth dynamics. At age 50, the excess wealth of the top 0.1%, relative to mid-wealth households, is accounted for by higher saving rates (34%), initial wealth (32%), and higher returns (27%), while higher labor income (5%) and inheritances (1%) account for the residual. One-fourth of the wealthiest—the “New Money”—start with negative wealth but experience rapid wealth growth early in life. Relative to the “Old Money”, the New Money are characterized by even higher saving rates and returns, and also by higher labor income.

Keywords: wealth inequality; lifecycle wealth dynamics; rate of return heterogeneity; bequests; saving rate heterogeneity (search for similar items in EconPapers)
JEL-codes: D14 D15 E21 (search for similar items in EconPapers)
Pages: 113 pages
Date: 2023-03-09, Revised 2023-07-13
New Economics Papers: this item is included in nep-eur
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Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Why Are the Wealthiest So Wealthy? A Longitudinal Empirical Investigation (2023)
Working Paper: Why Are the Wealthiest So Wealthy? A Longitudinal Empirical Investigation (2023)
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DOI: 10.20955/wp.2023.004

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