Skewed Wealth Distributions: Theory and Empirics

By Jess Benhabib, Alberto Bisin. Journal of Economic Literature, 2018

265 citations recorded by the source corpus.

Invariably, across a cross-section of countries and time periods, wealth distributions are skewed to the right displaying thick upper tails, that is, large and slowly declining top wealth shares. In this survey, we categorize the theoretical studies on the distribution of wealth in terms of the underlying economic mechanisms generating skewness and thick tails. Further, we show how these mechanisms can be micro-founded by the consumption–savings decisions of rational agents in specific economic and demographic environments. Finally we map the large empirical work on the wealth distribution to its theoretical underpinnings. (JEL C46, D14, D31, E21, J31)

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/a777e4737976d9348ace016d54298c877cfa19a1

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In Economics and Econometrics

Citations in the corpus

Heterogeneity and Persistence in Returns to Wealth (2018, unknown): “Surveying the theories of skewed wealth distributions, Benhabib and Bisin (2016) revisit and put in a novel perspective two theorems, one by Grey (1994) and another by Kesten (1973). Grey’s theorem asserts that, in an economy with homogeneous returns to wealth and heterogeneous income, the wealth di”
A simpler theory of optimal capital taxation (2017, unknown): “Second, it is difficult to generate a saving behavior that makes the distribution of wealth much more concentrated than that of labor earnings (Benhabib and Bisin, 2016).”
Top wealth shares in the UK over more than a century (2018, background): “The results cover, in addition to the evolution of top wealth shares, the shape of the upper tail, which builds a bridge with the theoretical literature on thick tails of the wealth distribution (see Benhabib and Bisin, 2016, for a recent review).”
Income and Wealth Inequality in America, 1949–2016 (2018, unknown): “…this assumption, as models based on labor income risk typically produce too little wealth concentration at the top and cannot account for substantial shifts in wealth inequality that occur over short time horizons (Gabaix et al. 2016; Hubmer, Krusell, and Smith 2017; Benhabib and Bisin 2018).”
Saving Behavior Across the Wealth Distribution: The Importance of Capital Gains (2019, unknown): “Our findings suggest that (66)See Benhabib and Bisin (2018) for a review of the state-of-the-art in the theoretical wealth inequality literature.”
A Schumpeterian Model of Top Income Inequality (2014, unknown): “…models than an outcome.2 The most closely related papers to this one are Levy (2003), Nirei (2009), Benhabib, Bisin, and Zhu (2011), Moll (2012), Piketty and Saez (2013), Toda (2014), Piketty and Zucman (2015), Benhabib and Bisin (2016), Hubmer, Krusell, and Smith (2016), and Nirei and Aoki (2016).”
Macroeconomics and Household Heterogeneity (2016, methodology): “…but the benchmark economy has a fat right-tailed wealth distribution that is well approximated by a Pareto distribution (as in the data, see e.g. Benhabib and Bisin, 2016), whereas the original KS economy displays a wealth distribution whose right tail more closely resembles that of a…”