Abstract
Following new evidence on increasing wealth concentration across several advanced countries, the topic has been attracting a great deal of attention. Estimating the size distribution of wealth and understanding its determinants is an exercise surrounded with high levels of uncertainty and substantial controversies, but remains crucial to guide policy interventions. This short note attempts to link Tony Atkinson’s body of work on wealth concentration to the fast expanding empirical research on wealth measurement as well as on the determinants of its growing concentration.
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Notes
In particular, asset price changes affect different parts of the distribution differently due to a substantial heterogeneity of asset portfolios across the wealth distribution. “Housing booms lead to substantial wealth gains for leveraged middle-class households and tend to decrease wealth inequality, all else equal. Stock market booms primarily boost the wealth of households at the top of the wealth distribution as their portfolios are dominated by listed and unlisted business equity. Portfolio heterogeneity thus gives rise to a race between the housing market and the stock market in shaping the wealth distribution.”(Kuhn et al. 2018, p. 3).
A similar distinction is echoed in the work by Piketty and Zucman (2014). The authors note that “relative asset price effects often vastly dominate volume effects in the short run, and sometimes in the medium run as well”. Moreover, after decomposing the evolution of aggregate wealth accumulation between 1970 and 2010, for a number of rich economies, into saving and capital gains effects, the authors suggest that “the main finding is that new savings explain the largest part of wealth accumulation, but that there is also a clear pattern of positive capital gains” (p. 24).
A short article from Alvaredo and García-Peñalosa (2018), introducing a special issue of the Journal of Economic Inequality in memory of Tony Aktinson, quote a passage from Atkinson (2018) where he claims that “...part of the fall in bequests in the early 1970s may have been due to falling stock prices... To this extent, the answer may be, not that inheritance has returned, but that it never really went away.”
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The Salvatore Morelli would like to thank Facundo Alvaredo, Yonatan Berman, Andrea Brandolini, and Marco Ranaldi for their comments and reactions.
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Morelli, S. The Dynamics of Wealth Concentration: Thoughts on Tony Atkinson’s Contributions. Ital Econ J 6, 197–205 (2020). https://doi.org/10.1007/s40797-019-00119-7
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DOI: https://doi.org/10.1007/s40797-019-00119-7