Entrepreneurial Rates of Return and Wealth Inequality

Bettina Brüggemann and Zachary L. Mahone

Department of Economics Working Papers from McMaster University

Abstract: We investigate rates of return to business wealth and total net worth along the wealth distribution in a quantitative model of occupational choice and housing. While it has long been established that these models are very successful at replicating wealth inequality, we show that they also produce endogenous rates of return to private equity and total net worth that share important properties with their empirical counterparts. Rates of return to entrepreneurial wealth are heterogeneous, persistent, negatively correlated with net worth, and very dependent on household type. Rates of return to total net worth exhibit similar scale dependence as the data but are positively correlated with net worth.

Keywords: Wealth Inequality; Returns to Wealth; Entrepreneurship; Housing; Type and Scale Dependence (search for similar items in EconPapers)
JEL-codes: D14 D15 D31 E21 G11 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2023-10
New Economics Papers: this item is included in nep-dge, nep-ent and nep-fdg
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Persistent link: https://EconPapers.repec.org/RePEc:mcm:deptwp:2023-03

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