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Working Paper
Why Are the Wealthiest So Wealthy? A Longitudinal Empirical Investigation
We use Norwegian administrative panel data on wealth and income between 1993 and 2015 to study lifecycle wealth dynamics, focusing on the wealthiest households. On average, the wealthiest start their lives substantially richer than other households in the same cohort, own mostly private equity, earn higher returns, derive most of their income from dividends and capital gains, and save at higher rates. At age 50, the excess wealth of the top 0.1% group relative to mid-wealth households is accounted for in about equal terms by higher saving rates (34%), higher initial wealth (32%), and higher ...
Working Paper
Why Are the Wealthiest So Wealthy? A Longitudinal Empirical Investigation
We use 1993–2015 Norwegian administrative panel data on wealth and income to study lifecycle wealth dynamics. At age 50, the excess wealth of the top 0.1%, relative to mid-wealth households, is accounted for by higher saving rates (34%), initial wealth (32%), and higher returns (27%), while higher labor income (5%) and inheritances (1%) account for the residual. One-fourth of the wealthiest—the “New Money”—start with negative wealth but experience rapid wealth growth early in life. Relative to the “Old Money”, the New Money are characterized by even higher saving rates and ...
Working Paper
Why Are the Wealthiest So Wealthy? New Longitudinal Empirical Evidence and Implications for Theories of Wealth Inequality
CORRECT ORDER OF AUTHORS: Hubmer, Halvorsen, Salgado, Ozkan. We use 1993--2015 Norwegian administrative panel data on wealth and income to study lifecycle wealth dynamics. By employing a novel budget constraint approach, we show that at age 50 the excess wealth of the top 0.1%, relative to mid-wealth households, is accounted for by higher saving rates (38%), inheritances (34%), returns (23%), and labor income (5%). One-fourth of the wealthiest---the "New Money"---start with negative wealth but experience rapid wealth growth early in life. Relative to the "Old Money," the New Money are ...