A Micro Perspective on r > g

Roberto Iacono () and Elisa Palagi
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Elisa Palagi: SSSUP - Scuola Universitaria Superiore Sant'Anna = Sant'Anna School of Advanced Studies [Pisa]

World Inequality Lab Working Papers from HAL

Abstract: For which segments of the net wealth distribution are returns to wealth higher than growth rates of income? Although Piketty's r > g is conceived as a tool to highlight distributional concerns, it does not account for covariation between real rates of return and position in the net wealth distribution. By exploiting large-scale administrative data on estimated gross and net personal wealth in Norway from 2010 to 2018, this paper establishes the first micro-level analysis of the difference between the real return on wealth and the real growth rate of total pre-tax income across the entire net wealth distribution. We show that, for the top half of the distribution, the aggregate R > G underestimates its micro counterpart r>g, whilst the opposite happens for the bottom half, indicating that the micro r > g qualifies as a more precise measure to thoroughly analyze the dynamics of wealth inequality. We show as well that around 44% of the variation in r > g when moving up from the bottom to the top decile of the net wealth distribution is associated with scale dependence, whilst the residual variation can be attributed to persistent heterogeneity.

Keywords: Wealth inequality; Income inequality; Norway (search for similar items in EconPapers)
Date: 2021-01
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03131196
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: A micro perspective on r > g (2023)
Working Paper: A micro perspective on r > g (2022)
Working Paper: A Micro Perspective on r > g (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wilwps:halshs-03131196

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