Investor Sophistication and Capital Income Inequality

Marcin Kacperczyk, Jaromir Nosal and Luminita Stevens

No 20246, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: What contributes to the growing income inequality across U.S. households? We develop an information- based general equilibrium model that links capital income derived from financial assets to a level of investor sophistication. Our model implies income inequality between sophisticated and unsophisticated investors that is growing in investors' aggregate and relative sophistication in the market. We show that our model is quantitatively consistent with the data from the U.S. market. In addition, we provide supporting evidence for our mechanism using a unique set of cross-sectional and time-series predictions on asset ownership and stock turnover.

JEL-codes: E24 E25 E44 G11 G12 G23 (search for similar items in EconPapers)
Date: 2014-06
New Economics Papers: this item is included in nep-dge and nep-mac
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Citations: View citations in EconPapers (9)

Published as Marcin Kacperczyk & Jaromir Nosal & Luminita Stevens, 2018. "Investor Sophistication and Capital Income Inequality," Journal of Monetary Economics, .

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Related works:
Journal Article: Investor sophistication and capital income inequality (2019)
Working Paper: Investor Sophistication and Capital Income Inequality (2018)
Working Paper: Investor sophistication and capital income inequality (2015)
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