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Rapid Dynamics of Top Wealth Shares and Self-Made Fortunes: What Is the Role of Family Firms?

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  • Andrew G. Atkeson
  • Magnus Irie

Abstract

We derive an analytical link between the fast dynamics of inequality at the top of the wealth distribution and the prevalence of newly created fortunes. Specifically, in the context of a random growth model of wealth accumulation, the shape of the top of the wealth distribution changes rapidly only if the pace with which new fortunes are created is fast. Quantitatively, the decision of a few families to bear a large amount of idiosyncratic risk in the form of family firms is crucial in accounting for both the prevalence of new fortunes and the dynamics of top wealth inequality.

Suggested Citation

  • Andrew G. Atkeson & Magnus Irie, 2022. "Rapid Dynamics of Top Wealth Shares and Self-Made Fortunes: What Is the Role of Family Firms?," American Economic Review: Insights, American Economic Association, vol. 4(4), pages 409-424, December.
    • Handle: RePEc:aea:aerins:v:4:y:2022:i:4:p:409-24
    DOI: 10.1257/aeri.20210560
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    Citations

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    Cited by:

    1. Matthieu Gomez & Émilien Gouin‐Bonenfant, 2024. "Wealth Inequality in a Low Rate Environment," Econometrica, Econometric Society, vol. 92(1), pages 201-246, January.
    2. Fernholz, Ricardo T. & Hagler, Kara, 2023. "Rising inequality and declining mobility in the Forbes 400," Economics Letters, Elsevier, vol. 230(C).
    3. Enea Baselgia & Isabel Z. Martínez, 2024. "Using Rich Lists to Study the Super-Rich and Top Wealth Inequality: Insights from Switzerland," CESifo Working Paper Series 10993, CESifo.

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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