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Wealth Distribution and Social Mobility in the US: A Quantitative Approach

Jess Benhabib, Alberto Bisin, Mi Luo

NBER Working Paper No. 21721
Issued in November 2015, Revised in December 2015
NBER Program(s):Economic Fluctuations and Growth

This paper attempts to quantitatively identify the factors that drive wealth dynamics in the U.S. and are consistent with its observed skewed cross-sectional distribution and social mobility. We concentrate on three critical factors: a skewed and persistent distribution of earnings, differential saving and bequest rates across wealth levels, and capital income risk. All of these factors are necessary for matching both distribution and mobility, with a distinct role in inducing wealth accumulation near the borrowing constraints, contributing to the thick top tail of wealth, and affecting upward and/or downward social mobility.

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Document Object Identifier (DOI): 10.3386/w21721

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