Affiliation:
1. Department of Economics, University of California Los Angeles, and Federal Reserve Bank of Minneapolis (email: )
2. Department of Finance, London School of Economics (email: )
Abstract
We derive an analytical link between the fast dynamics of inequality at the top of the wealth distribution and the prevalence of newly created fortunes. Specifically, in the context of a random growth model of wealth accumulation, the shape of the top of the wealth distribution changes rapidly only if the pace with which new fortunes are created is fast. Quantitatively, the decision of a few families to bear a large amount of idiosyncratic risk in the form of family firms is crucial in accounting for both the prevalence of new fortunes and the dynamics of top wealth inequality. (JEL D22, D31, G32, L25)
Publisher
American Economic Association
Subject
Management, Monitoring, Policy and Law,Geography, Planning and Development
Cited by
3 articles.
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