Inequality Among World Citizens: 1820-1992

By François Bourguignon and Christian Morrisson

American Economic Review, September 2002

This paper investigates the distribution of well being among world citizens during the last two centuries. The estimates show that inequality of world distribution of income worsened from the beginning of the 19th century to World War II and after that se...

Wealth Tax Mobility and Tax Coordination

By David R. Agrawal, Dirk Foremny, and Clara Martínez-Toledano

American Economic Journal: Applied Economics, January 2025

We study the effects of decentralized wealth taxation on mobility and the effectiveness of tax coordination at mitigating tax competition. We exploit the reintroduction of the Spanish wealth tax, after which all regions except Madrid levied positive tax r...

Wealth Inequality, Aggregate Consumption, and Macroeconomic Trends under Incomplete Markets

By Byoungchan Lee

American Economic Journal: Macroeconomics, January 2025

I construct an incomplete market model featuring a closed-form expression for optimal consumption. In the model, individual consumption is an isoelastic function of wealth, inclusive of income, yielding partial consumption smoothing based on borrowing and...

Contractual Structure and Wealth Accumulation

By Dilip Mookherjee and Debraj Ray

American Economic Review, September 2002

Can historical wealth distributions affect long-run output and inequality despite "rational" saving, convex technology and no externalities? We consider a model of equilibrium short-period financial contracts, where poor agents face credit constraints owi...

The Great Recession and the Widening Income Gap between Alumni of Elite and Less Selective Universities

By Russell Weinstein

American Economic Journal: Economic Policy, February 2025

Using mobility report card data, I show the income gap between alumni of elite and less selective universities widened for cohorts graduating during the Great Recession. This is evident for mean and median incomes and access to high earning percentiles. R...

Measuring Income and Income Inequality

[Symposium: Income Inequality]

By Conor Clarke and Wojciech Kopczuk

Journal of Economic Perspectives, Spring 2025

Income inequality is important, but attempts to measure it arrive at strikingly different conclusions. Why? We use recent disputes over measuring United States income inequality to return to first principles about both the income concept and inequality me...

Macro Perspectives on Income Inequality

[Symposium: Income Inequality]

By Matthieu Gomez

Journal of Economic Perspectives, Spring 2025

Inequality has become a defining challenge for modern economies and a central focus of economic research over the past two decades. I begin by revisiting the foundations of income measurement, showing that standard definitions—taxable income, factor inc...

Public Finance Implications of Economic Inequality

[Symposium: Income Inequality]

By Alan J. Auerbach

Journal of Economic Perspectives, Spring 2025

This paper considers questions about the implications of rising inequality for the theory and practice of public finance. It begins by addressing fundamental reasons why the distribution of income or wealth on an annual basis before taxes and transfers of...

What Is the Value of the Child and Dependent Care Credit?

By Gabrielle Pepin

AEA Papers and Proceedings, May 2025

The Child and Dependent Care Credit (CDCC) subsidizes child care costs for working families. In response to the COVID-19 pandemic, the American Rescue Plan Act of 2021 increased the CDCC's generosity during 2021 only. I find that while the CDCC is of rela...

Heterogeneous Agent Models

By Ayşe İmrohoroğlu

AEA Papers and Proceedings, May 2025

Heterogeneous agent models have become central to modern macroeconomic research, often replacing the representative agent framework. However, what is core for these frameworks is the use of microfoundations that involve optimizing behavior. The strength o...

Global Evidence on Children's Living Arrangements

By Anne Ardila Brenøe and Melanie Wasserman

AEA Papers and Proceedings, May 2025

This paper provides global evidence on the living arrangements of children, using harmonized census data from 95 countries encompassing 85 percent of the world population. While residing with two parents is the most common living arrangement in nearly eve...

Root Causes of the Racial Wealth Gap: A Critique of the Fed View

By William A. Darity Jr. and Stephan Lefebvre

AEA Papers and Proceedings, May 2025

We address the Federal Reserve's model for Black–White wealth inequality. The Fed view has it that the Black–White wealth gap, when measured with an "expanded wealth concept," is smaller than previously thought and primarily explained by income differ...

Growth and Redistribution: The Hedging Perspective

By Larry Samuelson and Jakub Steiner

American Economic Review: Insights, June 2025

We investigate the impact of wealth redistribution on economic growth, building on Kelly's (1956) optimal investment portfolio theory. A growth-optimal policy redistributes wealth from "lucky" overperforming individuals to underperforming ones, minimizing...

Nominal Devaluations, Inflation, and Inequality

By Andrés Blanco, Andrés Drenik, and Emilio Zaratiegui

American Economic Journal: Macroeconomics, July 2025

We study the distribution of labor income during large devaluations. Across countries, inequality falls after large devaluations within the context of a surge in inflation and a fall and subsequent recovery of real labor income. To better understand inequ...

International Transmission of Inequality through Trade

By Sergey Nigai

American Economic Journal: Economic Policy, August 2025

I examine the international transmission of income inequality through trade. Using firm-level and aggregate data, I find that exporting to more unequal countries increases domestic inequality. I rationalize this finding by developing a model of internatio...

Economic Status and Health in Childhood: The Origins of the Gradient

By Anne Case, Darren Lubotsky, and Christina Paxson

American Economic Review, December 2002

The well-known positive association between health and income in adulthood has antecedents in childhood. Not only is children's health positively related to household income, but the relationship between household income and children's health becomes more...

How Regional Inequality and Migration Drive Housing Prices and Rents

[Symposium: Housing Markets]

By Greg Howard and Jack Liebersohn

Journal of Economic Perspectives, Summer 2025

We argue that rising regional inequality contributes to higher average housing prices and rents. We show three key empirical facts that contribute to this mechanism: first, income growth has been faster in already high-income cities; second, people are dr...

Curbing Rising Housing Costs: A Model-Based Policy Comparison

[Symposium: Housing Markets]

By Boaz Abramson and Tim Landvoigt

Journal of Economic Perspectives, Summer 2025

Recent decades have seen house prices grow strongly relative to incomes, making housing ever less affordable. We develop and quantify a model of segmented housing markets to study the drivers of rising housing costs and to evaluate policies aimed at curbi...

International Dimensions of Housing Markets

[Symposium: Housing Markets]

By Cristian Badarinza and Tarun Ramadorai

Journal of Economic Perspectives, Summer 2025

We make the case that an international perspective on housing markets can help us understand why house prices and transactions volumes sometimes vary in ways that cannot easily be attributed to local economic factors. We first document cross-country and c...

Micro versus Macro Labor Supply Elasticities: The Role of Dynamic Returns to Effort

By Henrik Kleven, Claus Kreiner, Kristian Larsen, and Jakob Søgaard

American Economic Review, September 2025

We investigate long-run earnings responses to taxes in the presence of dynamic returns to effort. First, we develop a theoretical model of earnings determination with dynamic returns to effort. In this model, earnings responses are delayed and mediated by...