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- Title
Earnings Inequality and Other Determinants of Wealth Inequality.
- Authors
Benhabib, Jess; Bisin, Alberto; Luo, Mi
- Abstract
We study the relation between the distribution of labor earnings and the distribution of wealth. We show, theoretically as well as empirically, that while labor earnings and precautionary savings are important determinants of wealth inequality factors, they cannot by themselves account for the thick tail of (the large top shares in) the observed distribution of wealth. Other determinants, like stochastic returns to wealth, as well as savings rates and rates of returns increasing in wealth, need to be accounted for.
- Subjects
WAGE differentials; WEALTH; INCOME inequality; SAVINGS; RATE of return
- Publication
American Economic Review, 2017, Vol 107, Issue 5, p593
- ISSN
0002-8282
- Publication type
Article
- DOI
10.1257/aer.p20171005