The Distribution of Wealth and the MPC: Implications of New European Data

By Christopher D. Carroll, Jiri Slacalek, and Kiichi Tokuoka

American Economic Review, May 2014

Using a standard, realistically calibrated model of buffer-stock saving with transitory and permanent income shocks, we study how cross-country differences in the wealth distribution and household income dynamics affect the marginal propensity to consume ...

Consumption Inequality over the Last Half Century: Some Evidence Using the New PSID Consumption Measure

By Orazio Attanasio and Luigi Pistaferri

American Economic Review, May 2014

This paper contributes to the debate regarding trends in consumption inequality in the United States. We present a new measure of consumption inequality based on the redesigned 1999–2011 PSID. We impute consumption to the families observed before 19...

Is the United States Still a Land of Opportunity? Recent Trends in Intergenerational Mobility

By Raj Chetty, Nathaniel Hendren, Patrick Kline, Emmanuel Saez, and Nicholas Turner

American Economic Review, May 2014

We present new evidence on trends in intergenerational mobility in the United States using administrative earnings records. We find that percentile rank-based measures of intergenerational mobility have remained extremely stable for the 1971–1993 bi...

Agricultural Productivity Differences across Countries

By Douglas Gollin, David Lagakos, and Michael E. Waugh

American Economic Review, May 2014

Recent studies argue that cross-country labor productivity differences are much larger in agriculture than in the aggregate. We reexamine the agricultural productivity data underlying this conclusion using new evidence from disaggregate sources. We find t...

Disparities in Wealth Accumulation and Loss from the Great Recession and Beyond

By Signe-Mary McKernan, Caroline Ratcliffe, Eugene Steuerle, and Sisi Zhang

American Economic Review, May 2014

Using over two decades of Survey of Consumer Finances data and a pseudo-panel technique, we measure the impact of the Great Recession on US family wealth relative to the counterfactual of what wealth would have been given wealth accumulation trajectories....

Marry Your Like: Assortative Mating and Income Inequality

By Jeremy Greenwood, Nezih Guner, Georgi Kocharkov, and Cezar Santos

American Economic Review, May 2014

Has there been an increase in positive assortative mating? Does assortative mating contribute to household income inequality? Data from the United States Census Bureau suggests there has been a rise in assortative mating. Additionally, assortative mating ...

Powering Up China: Income Distributions and Residential Electricity Consumption

By Maximilian Auffhammer and Catherine D. Wolfram

American Economic Review, May 2014

Current forecasts suggest that the vast majority of growth in energy demand will come from the developing world, and that China will play a major part in that growth. This paper presents evidence suggesting that the shape of the income distribution, which...

The Return of "Patrimonial Capitalism": A Review of Thomas Piketty's Capital in the Twenty-First Century

By Branko Milanovic

Journal of Economic Literature, June 2014

Capital in the Twenty-First Century by Thomas Piketty provides a unified theory of the functioning of the capitalist economy by linking theories of economic growth and functional and personal income distributions. It argues, based on the long-run h...

Do Poverty Traps Exist? Assessing the Evidence

[Symposium: Classic Ideas in Development]

By Aart Kraay and David McKenzie

Journal of Economic Perspectives, Summer 2014

A "poverty trap" can be understood as a set of self-reinforcing mechanisms whereby countries start poor and remain poor: poverty begets poverty, so that current poverty is itself a direct cause of poverty in the future. The idea of a poverty trap has this...

The Incentive Effects of Marginal Tax Rates: Evidence from the Interwar Era

By Christina D. Romer and David H. Romer

American Economic Journal: Economic Policy, August 2014

This paper uses the interwar United States as a laboratory for investigating the incentive effects of marginal income tax rates. We examine the impact of the large changes in rates in this period on taxable income using time-series/cross-section analysis ...

Financial Globalization, Inequality, and the Rising Public Debt

By Marina Azzimonti, Eva de Francisco, and Vincenzo Quadrini

American Economic Review, August 2014

During the last three decades government debt has increased in most developed countries. During the same period we have also observed a significant liberalization of international financial markets. We propose a multi-country model with incomplete markets...

The Distributive Impacts of Financial Development: Evidence from Mortgage Markets during US Bank Branch Deregulation

By Ishani Tewari

American Economic Journal: Applied Economics, October 2014

Well-functioning credit markets play a key role in boosting overall economic growth, but their impact on distributional outcomes is much less clear. I use a quasi-experimental setting provided by branch banking deregulation, an important episode of US ...

Estimating Taxable Income Responses Using Danish Tax Reforms

By Henrik Jacobsen Kleven and Esben Anton Schultz

American Economic Journal: Economic Policy, November 2014

This paper estimates taxable income responses using a series of Danish tax reforms and population-wide administrative data since 1980. The tax variation and data in Denmark makes it possible to overcome the biases from nontax changes in inequality and ...

How Can Scandinavians Tax So Much?

[Symposium: Tax Enforcement and Compliance]

By Henrik Jacobsen Kleven

Journal of Economic Perspectives, Fall 2014

American visitors to Scandinavian countries are often puzzled by what they observe: despite large income redistribution through distortionary taxes and transfers, these are very high-income countries. They rank among the highest in the world in terms of ...

Taxing across Borders: Tracking Personal Wealth and Corporate Profits

[Symposium: Tax Enforcement and Compliance]

By Gabriel Zucman

Journal of Economic Perspectives, Fall 2014

This article attempts to estimate the magnitude of corporate tax avoidance and personal tax evasion through offshore tax havens. US corporations book 20 percent of their profits in tax havens, a tenfold increase since the 1980; their effective tax rate ha...

The Rise and Decline of General Laws of Capitalism

[Symposium: Wealth and Inequality]

By Daron Acemoglu and James A. Robinson

Journal of Economic Perspectives, Winter 2015

Thomas Piketty's (2013) book, Capital in the 21st Century, follows in the tradition of the great classical economists, like Marx and Ricardo, in formulating general laws of capitalism to diagnose and predict the dynamics of inequality. We argue...

Pareto and Piketty: The Macroeconomics of Top Income and Wealth Inequality

[Symposium: Wealth and Inequality]

By Charles I. Jones

Journal of Economic Perspectives, Winter 2015

Since the early 2000s, research by Thomas Piketty, Emmanuel Saez, and their coauthors has revolutionized our understanding of income and wealth inequality. In this paper, I highlight some of the key empirical facts from this research and comment on how ...

What Do We Know about the Evolution of Top Wealth Shares in the United States?

[Symposium: Wealth and Inequality]

By Wojciech Kopczuk

Journal of Economic Perspectives, Winter 2015

I discuss available evidence about the evolution of top wealth shares in the United States over the course of the 20th century. The three main approaches—the Survey of Consumer Finances, estate tax multiplier, and capitalization methods—gene...

Putting Distribution Back at the Center of Economics: Reflections on Capital in the Twenty-First Century

[Symposium: Wealth and Inequality]

By Thomas Piketty

Journal of Economic Perspectives, Winter 2015

When a lengthy book is widely discussed in academic circles and the popular media, it is probably inevitable that the arguments of the book will be simplified in the telling and retelling. In the case of my book Capital in the Twenty-First Century

Inequality, Leverage, and Crises

By Michael Kumhof, Romain Rancière, and Pablo Winant

American Economic Review, March 2015

The paper studies how high household leverage and crises can be caused by changes in the income distribution. Empirically, the periods 1920-1929 and 1983-2008 both exhibited a large increase in the income share of high-income households, a large increase ...