American Economic Review Vol. 109 No. 5 2019

Wealth Distribution and Social Mobility in the US: A Quantitative Approach

Jess Benhabib¹; Alberto Bisin¹; Mi Luo²

¹ Department of Economics, New York University, 19 W 4th Street, FL 6, New York, NY 10012, and the National Bureau of Economic Research (email: ) · ² Department of Economics, Emory University, 1602 Fishburne Drive, Atlanta, GA 30307 (email: )

Abstract

We quantitatively identify the factors that drive wealth dynamics in the United States and are consistent with its skewed cross-sectional distribution and with social mobility. We concentrate on three critical factors: (i) skewed earnings, (ii) differential saving rates across wealth levels, and (iii) stochastic idiosyncratic returns to wealth. All of these are fundamental for matching both distribution and mobility. The stochastic process for returns which best fits the cross-sectional distribution of wealth and social mobility in the United States shares several statistical properties with those of the returns to wealth uncovered by Fagereng et al. (2017) from tax records in Norway.

DOI

10.1257/aer.20151684

Volume

109

Issue

5

Pages

1623-1647

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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