IDEAS home Printed from https://ideas.repec.org/p/fip/fedgfe/2018-24.html
   My bibliography  Save this paper

How Much has Wealth Concentration Grown in the United States? A Re-Examination of Data from 2001-2013

Author

Abstract

Well known research based on capitalized income tax data shows robust growth in wealth concentration in the late 2000s. We show that these robust growth estimates rely on an assumption---homogeneous rates of return across the wealth distribution---that is not supported by data. When the capitalization model incorporates heterogeneous rates of return (on just interest-bearing assets), wealth concentration estimates in 2011 fall from 40.5% to 33.9%. These estimates are consistent in levels and trend with other micro wealth data and show that wealth concentration increases until the Great Recession, then declines before increasing again.

Suggested Citation

  • Jesse Bricker & Peter Hansen & Alice Henriques Volz, 2018. "How Much has Wealth Concentration Grown in the United States? A Re-Examination of Data from 2001-2013," Finance and Economics Discussion Series 2018-024, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:2018-24
    DOI: 10.17016/FEDS.2018.024
    as

    Download full text from publisher

    File URL: https://www.federalreserve.gov/econres/feds/files/2018024pap.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.17016/FEDS.2018.024?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jason DeBacker & Bradley Heim & Vasia Panousi & Shanthi Ramnath & Ivan Vidangos, 2013. "Rising Inequality: Transitory or Persistent? New Evidence from a Panel of U.S. Tax Returns," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 46(1 (Spring), pages 67-142.
    2. Facundo Alvaredo & Anthony Atkinson & Lucas Chancel & Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2016. "Distributional National Accounts (DINA) Guidelines : Concepts and Methods used in WID.world," World Inequality Lab Working Papers halshs-02794308, HAL.
    3. Simon Kuznets & Elizabeth Jenks, 1953. "Shares of Upper Income Groups in Income and Savings (1953)," NBER Books, National Bureau of Economic Research, Inc, number kuzn53-1.
    4. Laurent E. Calvet & John Y. Campbell & Paolo Sodini, 2007. "Down or Out: Assessing the Welfare Costs of Household Investment Mistakes," Journal of Political Economy, University of Chicago Press, vol. 115(5), pages 707-747, October.
    5. Congressional Budget Office, 2014. "The Distribution of Household Income and Federal Taxes, 2011," Reports 49440, Congressional Budget Office.
    6. Simon Kuznets & Elizabeth Jenks, 1953. "Shares of Upper Income Groups in Savings," NBER Chapters, in: Shares of Upper Income Groups in Income and Savings (1953), pages 171-218, National Bureau of Economic Research, Inc.
    7. Andreas Fagereng & Luigi Guiso & Davide Malacrino & Luigi Pistaferri, 2020. "Heterogeneity and Persistence in Returns to Wealth," Econometrica, Econometric Society, vol. 88(1), pages 115-170, January.
    8. Arthur B. Kennickell & R. Louise Woodburn, 1999. "CONSISTENT WEIGHT DESIGN FOR THE 1989, 1992 AND 1995 SCFs, AND THE DISTRIBUTION OF WEALTH," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 45(2), pages 193-215, June.
    9. Jesse Bricker & Lisa J. Dettling & Alice Henriques Volz & Joanne W. Hsu & Kevin B. Moore & John Edward Sabelhaus & Jeffrey P. Thompson & Richard Windle, 2014. "Changes in U.S. Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 100(4), September.
    10. Congressional Budget Office, 2014. "The Distribution of Household Income and Federal Taxes, 2011," Reports 49440, Congressional Budget Office.
    11. Wojciech Kopczuk, 2015. "What Do We Know about the Evolution of Top Wealth Shares in the United States?," Journal of Economic Perspectives, American Economic Association, vol. 29(1), pages 47-66, Winter.
    12. Jesse Bricker & Alice Henriques & Jacob Krimmel & John Sabelhaus, 2016. "Measuring Income and Wealth at the Top Using Administrative and Survey Data," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 47(1 (Spring), pages 261-331.
    13. Congressional Budget Office, 2014. "The Distribution of Household Income and Federal Taxes, 2011," Reports 49440, Congressional Budget Office.
    14. Daphne Greenwood, 1983. "An Estimation Of U.S. Family Wealth And Its Distribution From Microdata, 1973," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 29(1), pages 23-44, March.
    15. Lisa J. Dettling & Sebastian Devlin-Foltz & Jacob Krimmel & Sarah Pack & Jeffrey P. Thompson, 2015. "Comparing Micro and Macro Sources for Household Accounts in the United States: Evidence from the Survey of Consumer Finances," Finance and Economics Discussion Series 2015-86, Board of Governors of the Federal Reserve System (U.S.).
    16. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality in the United States, 1913–1998," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 1-41.
    17. Paul Eckerstorfer & Johannes Halak & Jakob Kapeller & Bernhard Schütz & Florian Springholz & Rafael Wildauer, 2016. "Correcting for the Missing Rich: An Application to Wealth Survey Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(4), pages 605-627, December.
    18. Jeff Larrimore & Jacob Mortenson & David Splinter, 2021. "Household Incomes in Tax Data: Using Addresses to Move from Tax-Unit to Household Income Distributions," Journal of Human Resources, University of Wisconsin Press, vol. 56(2), pages 600-631.
    19. Jesse Bricker & Michael Parisi & Jeffrey P. Thompson, 2018. "Top Income Concentration and Volatility," Finance and Economics Discussion Series 2018-010, Board of Governors of the Federal Reserve System (U.S.).
    20. Emmanuel Saez & Gabriel Zucman, 2016. "Editor's Choice Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(2), pages 519-578.
    21. Jason DeBacker & Bradley Heim & Vasia Panousi & Shanthi Ramnath & Ivan Vidangos, 2013. "Rising Inequality: Transitory or Persistent? New Evidence from a Panel of U.S. Tax Returns," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 44(1 (Spring), pages 67-142.
    22. Congressional Budget Office, 2014. "The Distribution of Household Income and Federal Taxes, 2011," Reports 49440, Congressional Budget Office.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jesse Bricker & Sarena Goodman & Alice Henriques Volz & Kevin B. Moore, 2021. "A Wealth of Information: Augmenting the Survey of Consumer Finances to Characterize the Full U.S. Wealth Distribution," Finance and Economics Discussion Series 2021-053, Board of Governors of the Federal Reserve System (U.S.).
    2. Goodman, Lucas, 2020. "Catching up or crowding out? The crowd-out effects of catch-up retirement contributions on non-retirement saving," Journal of Public Economics, Elsevier, vol. 188(C).
    3. Moritz Kuhn & Moritz Schularick & Ulrike I. Steins, 2020. "Income and Wealth Inequality in America, 1949–2016," Journal of Political Economy, University of Chicago Press, vol. 128(9), pages 3469-3519.
    4. Matthew Smith & Owen Zidar & Eric Zwick, 2020. "Top Wealth in America: New Estimates and Implications for Taxing the Rich," Working Papers 264, Princeton University, Department of Economics, Center for Economic Policy Studies..
    5. Spencer Bastani & Daniel Waldenström, 2020. "How Should Capital Be Taxed?," Journal of Economic Surveys, Wiley Blackwell, vol. 34(4), pages 812-846, September.
    6. Michael M. Batty & Jesse Bricker & Joseph S. Briggs & Alice Henriques Volz & Elizabeth Ball Holmquist & Susan Hume McIntosh & Kevin B. Moore & Eric R. Nielsen & Sarah Reber & Molly Shatto & Kamila Som, 2019. "Introducing the Distributional Financial Accounts of the United States," Finance and Economics Discussion Series 2019-017, Board of Governors of the Federal Reserve System (U.S.).
    7. Michael Batty & Jesse Bricker & Joseph Briggs & Sarah Friedman & Danielle Nemschoff & Eric Nielsen & Kamila Sommer & Alice Henriques Volz, 2021. "The Distributional Financial Accounts of the United States," NBER Chapters, in: Measuring Distribution and Mobility of Income and Wealth, pages 641-677, National Bureau of Economic Research, Inc.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jesse Bricker & Alice Henriques & Jacob Krimmel & John Sabelhaus, 2016. "Measuring Income and Wealth at the Top Using Administrative and Survey Data," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 47(1 (Spring), pages 261-331.
    2. Kacperczyk, Marcin & Nosal, Jaromir & Stevens, Luminita, 2019. "Investor sophistication and capital income inequality," Journal of Monetary Economics, Elsevier, vol. 107(C), pages 18-31.
    3. Michael M. Batty & Jesse Bricker & Joseph S. Briggs & Alice Henriques Volz & Elizabeth Ball Holmquist & Susan Hume McIntosh & Kevin B. Moore & Eric R. Nielsen & Sarah Reber & Molly Shatto & Kamila Som, 2019. "Introducing the Distributional Financial Accounts of the United States," Finance and Economics Discussion Series 2019-017, Board of Governors of the Federal Reserve System (U.S.).
    4. Jesse Bricker & Alice Henriques Volz & Kevin B. Moore, 2017. "Updates to the Sampling of Wealthy Families in the Survey of Consumer Finances," Finance and Economics Discussion Series 2017-114, Board of Governors of the Federal Reserve System (U.S.).
    5. Michael Batty & Jesse Bricker & Joseph Briggs & Sarah Friedman & Danielle Nemschoff & Eric Nielsen & Kamila Sommer & Alice Henriques Volz, 2021. "The Distributional Financial Accounts of the United States," NBER Chapters, in: Measuring Distribution and Mobility of Income and Wealth, pages 641-677, National Bureau of Economic Research, Inc.
    6. Gabriel Zucman, 2019. "Global Wealth Inequality," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 109-138, August.
    7. Atanu Ghoshray & Issam Malki & Javier Ordóñez, 2022. "On the long-run dynamics of income and wealth inequality," Empirical Economics, Springer, vol. 62(2), pages 375-408, February.
    8. Jeff Larrimore & Jacob Mortenson & David Splinter, 2021. "Household Incomes in Tax Data: Using Addresses to Move from Tax-Unit to Household Income Distributions," Journal of Human Resources, University of Wisconsin Press, vol. 56(2), pages 600-631.
    9. Adam Looney & Kevin B. Moore, 2015. "Changes in the Distribution of After-Tax Wealth: Has Income Tax Policy Increased Wealth Inequality?," Finance and Economics Discussion Series 2015-58, Board of Governors of the Federal Reserve System (U.S.).
    10. Chakraborty Robin & Kavonius Ilja Kristian & Pérez-Duarte Sébastien & Vermeulen Philip, 2019. "Is the Top Tail of the Wealth Distribution the Missing Link between the Household Finance and Consumption Survey and National Accounts?," Journal of Official Statistics, Sciendo, vol. 35(1), pages 31-65, March.
    11. Per Krusell & Anthony Smith & Joachim Hubmer, 2015. "The historical evolution of the wealth distribution: A quantitative-theoretic investigation," 2015 Meeting Papers 1406, Society for Economic Dynamics.
    12. Moritz Kuhn & Moritz Schularick & Ulrike I. Steins, 2020. "Income and Wealth Inequality in America, 1949–2016," Journal of Political Economy, University of Chicago Press, vol. 128(9), pages 3469-3519.
    13. Xavier Gabaix & Jean‐Michel Lasry & Pierre‐Louis Lions & Benjamin Moll, 2016. "The Dynamics of Inequality," Econometrica, Econometric Society, vol. 84, pages 2071-2111, November.
    14. Branko Milanovic, 2022. "After the Financial Crisis: The Evolution of the Global Income Distribution Between 2008 and 2013," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(1), pages 43-73, March.
    15. Bertrand Garbinti & Jonathan Goupille-Lebret & Thomas Piketty, 2021. "Accounting for Wealth-Inequality Dynamics: Methods, Estimates, and Simulations for France," Journal of the European Economic Association, European Economic Association, vol. 19(1), pages 620-663.
    16. Joachim Hubmer & Per Krusell & Anthony A. Smith Jr., 2020. "Sources of US Wealth Inequality: Past, Present, and Future," NBER Chapters, in: NBER Macroeconomics Annual 2020, volume 35, pages 391-455, National Bureau of Economic Research, Inc.
    17. Lucas Chancel, 2019. "Ten facts about income inequality in advanced economies," Working Papers hal-02876982, HAL.
    18. Benjamin Ching & Tayla Forward & Oscar Parkyn, 2023. "Estimating the Distribution of Wealth in New Zealand," Treasury Working Paper Series 23/01, New Zealand Treasury.
    19. Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2016. "Appendix to "Distributional National Accounts: Methods and Estimates for the United States"," Working Papers 201604, World Inequality Lab.
    20. Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2018. "Distributional National Accounts: Methods and Estimates for the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(2), pages 553-609.

    More about this item

    Keywords

    Wealth concentration; Household wealth;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedgfe:2018-24. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ryan Wolfslayer ; Keisha Fournillier (email available below). General contact details of provider: https://edirc.repec.org/data/frbgvus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.