Working Paper

Accounting for Wealth Concentration in the United States

Abstract: We assess the empirical relevance of different macroeconomic modeling approaches to wealth concentration, using the joint distribution of earnings, capital income and net worth in combination with an OLG model of household heterogeneity. We find large earnings disparities to be the primary source of US wealth concentration. This reflects the fact that labor income, from salaries but also from entrepreneurship, is a major income source for top income and wealth groups in the data. Bequests and differences in rates of return on capital together explain about half the holdings of the wealthiest of households, but much less for the rest.

Keywords: Wealth Inequality; Income and Earnings Distribution; Factor Share of Income; Bequests; Rate of Return Heterogeneity;

JEL Classification: D31; D33; E21;

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Bibliographic Information

Provider: Federal Reserve Bank of Cleveland

Part of Series: Working Papers

Publication Date: 2022-10-20

Number: 22-28