Rich and ever richer: Differential returns across socio-economic groups
Maximilian Mayerhofer and
No PKWP1914, Working Papers from Post Keynesian Economics Society (PKES)
This paper estimates rates of return across the gross wealth distribution in eight European countries. Like differential saving rates, differential rates of return matter for Post Keynesian theory, because they impact the income and wealth distribution and add an explosive element to growth models. We show that differential rates of return matter empirically by merging data on household balance sheets with long-run returns for individual asset categories. We find that (1) the composition of wealth differentiates between three socioeconomic groups: 30% are asset-poor, 65% are middle-class home owners, and the top 5% are business-owning capitalists; (2) rates of return rise across all groups; and (3) rates of return broadly follow a log-shaped function across the distribution, where inequality in the lower half of the distribution is higher than in the upper half. If socioeconomic groups are collapsed into the bottom 95% workers and top 5% capitalists, then rates of return are 5.6% for the former and 7.2% for the latter.
Keywords: rate of return; differential; wealth; distribution (search for similar items in EconPapers)
JEL-codes: D31 D33 E12 E21 E43 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
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http://www.postkeynesian.net/downloads/working-papers/PKWP1914_2FO0h0F.pdf First version, 2019 (application/pdf)
Working Paper: Rich and Ever Richer: Differential Returns Across Socio-Economic Groups (2019)
Working Paper: Rich and ever richer: Differential returns across socio-economic groups (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:pke:wpaper:pkwp1914
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