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A micro perspective on r > g

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  • Iacono, Roberto
  • Palagi, Elisa

Abstract

By exploiting large-scale administrative data on estimated gross and net personal wealth in Norway from 2010 to 2018, this paper establishes the first microlevel analysis of the difference between the real return on wealth and the real growth rate of total pretax income across the entire net wealth distribution. We show that for the top 40% of the distribution, aggregate R − G underestimates its micro counterpart r − g, while the opposite happens for the bottom 60%, indicating that micro r−g qualifies as a more precise measure to analyze the dynamics of income and wealth inequality thoroughly.

Suggested Citation

  • Iacono, Roberto & Palagi, Elisa, 2022. "A micro perspective on r > g," LSE Research Online Documents on Economics 114442, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:114442
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    File URL: http://eprints.lse.ac.uk/114442/
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    Cited by:

    1. Demetrio Guzzardi & Elisa Palagi & Andrea Roventini & Alessandro Santoro, 2022. "Reconstructing Income Inequality in Italy: New Evidence and Tax Policy Implications from Distributional National Accounts," World Inequality Lab Working Papers halshs-03693201, HAL.
    2. Marco Ranaldi & Elisa Palagi, 2022. "Heterogeneity in Macroeconomics: The Compositional Inequality Perspective," LIS Working papers 848, LIS Cross-National Data Center in Luxembourg.
    3. Matteo Dalle Luche & Demetrio Guzzardi & Elisa Palagi & Andrea Roventini & Alessandro Santoro, 2024. "Tackling the regressivity of the Italian tax system: An optimal taxation framework with heterogeneous returns to capital," World Inequality Lab Working Papers halshs-04753529, HAL.
    4. Matteo Dalle Luche & Demetrio Guzzardi & Elisa Palagi & Andrea Roventini & Alessandro Santoro, 2024. "Tackling the regressivity of the Italian tax system: An optimal taxation framework with heterogeneous returns to capital," World Inequality Lab Working Papers halshs-04753529, HAL.
    5. Blanchet, Thomas & Martínez-Toledano, Clara, 2023. "Wealth inequality dynamics in europe and the united states: Understanding the determinants," Journal of Monetary Economics, Elsevier, vol. 133(C), pages 25-43.

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    More about this item

    Keywords

    wealth inequality; tax records; Norway;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution

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