Skewed Wealth Distributions: Theory and Empirics
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.
Thanks to Mariacristina De Nardi, Steven Durlauf, Raquel Fernandez, Luigi Guiso, Dirk Krueger, Mi Luo, Ben Moll, Thomas Piketty, Alexis Toda, Shenghao Zhu, and Gabriel Zucman. We thank the Washington Center for Equitable Growth for financial support. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Jess Benhabib & Alberto Bisin, 2018. "Skewed Wealth Distributions: Theory and Empirics," Journal of Economic Literature, vol 56(4), pages 1261-1291. citation courtesy of