NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Skewed Wealth Distributions: Theory and Empirics

Jess Benhabib, Alberto Bisin

NBER Working Paper No. 21924
Issued in January 2016, Revised in May 2017
NBER Program(s):Economic Fluctuations and Growth

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 the distribution of wealth in terms of the underlying economic mechanisms generating skewness and thick tails. Further, we show how these mechanisms can be micro-founded by the consumption-saving decisions of rational agents in specific economic and demographic environments. Finally we map the large empirical work on the wealth distribution to its theoretical underpinnings.

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Document Object Identifier (DOI): 10.3386/w21924

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