Cross-Country Income Levels over Time: Did the Developing World Suddenly Become Much Richer?

By Robert Inklaar and D. S. Prasada Rao

American Economic Journal: Macroeconomics, January 2017

The latest global survey on relative prices and income levels, for the year 2011, showed changes to relative income levels that were larger in lower income countries, thereby narrowing the world income distribution compared to estimates based on the previ...

Tying the Double-Knot: The Role of Assets in Marriage Commitment

By Jeanne Lafortune and Corinne Low

American Economic Review, May 2017

What explains the growing gap in marriage rates between socioeconomic groups? We present a robust stylized fact not previously documented: marriage rates are higher for individuals with more assets. We argue this may be driven by marriage and cohabitation...

Global Inequality Dynamics: New Findings from WID.world

By Facundo Alvaredo, Lucas Chancel, Thomas Piketty, Emmanuel Saez, and Gabriel Zucman

American Economic Review, May 2017

This paper presents new findings on global inequality dynamics from the World Wealth and Income Database (WID.world), with particular emphasis on the contrast between the trends observed in the United States, China, France, and the United Kingdom. We obse...

Aggregate Demand and the Top 1 Percent

By Adrien Auclert and Matthew Rognlie

American Economic Review, May 2017

There has been a large rise in US top income inequality since the 1980s. We merge a widely studied model of the Pareto tail of labor incomes with a canonical model of consumption and savings to study the consequences of this increase for aggregate demand....

Earnings Inequality and Other Determinants of Wealth Inequality

By Jess Benhabib, Alberto Bisin, and Mi Luo

American Economic Review, May 2017

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, th...

Zipf's Law, Pareto's Law, and the Evolution of Top Incomes in the United States

By Shuhei Aoki and Makoto Nirei

American Economic Journal: Macroeconomics, July 2017

We construct a tractable neoclassical growth model that generates Pareto's law of income distribution and Zipf's law of the firm size distribution from idiosyncratic, firm-level productivity shocks. Executives and entrepreneurs invest in risk-free assets,...

The Distributional Consequences of Large Devaluations

By Javier Cravino and Andrei A. Levchenko

American Economic Review, November 2017

We study the impact of large exchange rate devaluations on the cost of living at different points on the income distribution. Poor households spend relatively more on tradeable product categories and consume lower-priced varieties within categories. Cha...

Monetary Policy According to HANK

By Greg Kaplan, Benjamin Moll, and Giovanni L. Violante

American Economic Review, March 2018

We revisit the transmission mechanism from monetary policy to household consumption in a Heterogeneous Agent New Keynesian (HANK) model. The model yields empirically realistic distributions of wealth and marginal propensities to consume because of two fea...

Estimating Economic Characteristics with Phone Data

By Joshua E. Blumenstock

AEA Papers and Proceedings, May 2018

Historically, economists have relied heavily on survey-based data collection to measure social and economic well-being. Here, we investigate the extent to which the "digital footprints" of an individual can be used to infer his or her socioeconomic charac...

The Elephant Curve of Global Inequality and Growth

By Facundo Alvaredo, Lucas Chancel, Thomas Piketty, Emmanuel Saez, and Gabriel Zucman

AEA Papers and Proceedings, May 2018

We present new evidence on global inequality and growth since 1980 using the World and Wealth Income Database. We plot the curve of cumulated growth from 1980 to 2016 by percentile of the global distribution of income per adult. This curve has an elephant...

From Communism to Capitalism: Private versus Public Property and Inequality in China and Russia

By Filip Novokmet, Thomas Piketty, Li Yang, and Gabriel Zucman

AEA Papers and Proceedings, May 2018

This paper combines national accounts, survey, wealth, and fiscal data (including recently released tax data on high-income taxpayers) in order to provide consistent series on the accumulation and distribution of income and wealth in China and Russia over...

Applying Generalized Pareto Curves to Inequality Analysis

By Thomas Blanchet, Bertrand Garbinti, Jonathan Goupille-Lebret, and Clara Martínez-Toledano

AEA Papers and Proceedings, May 2018

A generalized Pareto curve is defined as the curve of inverted Pareto coefficients b(p), where b(p) is the ratio between average income or wealth above rank p and the p-th quantile. We present this concept and show how it can be used to better estimate di...

Extreme Inequality: Evidence from Brazil, India, the Middle East, and South Africa

By Lydia Assouad, Lucas Chancel, and Marc Morgan

AEA Papers and Proceedings, May 2018

This paper presents new findings about inequality dynamics in Brazil, India, the Middle East, and South Africa from the World Inequality Database (WID.world). We combine tax data, household surveys, and national accounts in a systematic manner to produce ...

Income Volatility and the PSID: Past Research and New Results

By Robert Moffitt and Sisi Zhang

AEA Papers and Proceedings, May 2018

The PSID has major advantages for studying income volatility and, because of this, research using it has been responsible for major improvements in the methodology of studying income volatility. Its research on calendar trends finds a reasonably consisten...

Nonlinear Persistence and Partial Insurance: Income and Consumption Dynamics in the PSID

By Manuel Arellano, Richard Blundell, and Stephane Bonhomme

AEA Papers and Proceedings, May 2018

In this paper we highlight the importance of the PSID in understanding income dynamics and consumption insurance. We explore the nonlinear nature of income shocks and describe a new quantile-based panel data framework for income dynamics. In this approach...

Wealth Redistribution after Exchange Rate Devaluations

By Andres Drenik, Gustavo Pereira, and Diego J. Perez

AEA Papers and Proceedings, May 2018

We document that the likelihood of having assets in foreign currency is increasing in households' income within many emerging economies. This pattern leads to heterogeneous exposures of wealth to exchange rate movements. We analyze the redistribution of l...

Inequality and Globalization: A Review Essay

By Martin Ravallion

Journal of Economic Literature, June 2018

As normally measured, "global inequality" is the relative inequality of incomes found among all people in the world no matter where they live. Francois Bourguignon and Branko Milanovic have written insightful and timely books on global inequality, emp...

Economic Shocks and Crime: Evidence from the Brazilian Trade Liberalization

By Rafael Dix-Carneiro, Rodrigo R. Soares, and Gabriel Ulyssea

American Economic Journal: Applied Economics, October 2018

This paper studies the effect of changes in economic conditions on crime. We exploit the 1990s trade liberalization in Brazil as a natural experiment generating exogenous shocks to local economies. We document that regions exposed to larger tariff reducti...

Skewed Wealth Distributions: Theory and Empirics

By Jess Benhabib and Alberto Bisin

Journal of Economic Literature, December 2018

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 th...

The Taxing Deed of Globalization

By Peter H. Egger, Sergey Nigai, and Nora M. Strecker

American Economic Review, February 2019

This paper examines the effects of globalization on the distribution of worker-specific labor taxes using a unique set of tax calculators. We find a differential effect of higher trade and factor mobility on relative tax burdens in 1980–1993 versus 1994...