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Factors behind rising U.S. wealth inequality: a decomposition and policy implications

Author

Listed:
  • Joanna Tyrowicz

    (Group for Research in Applied Economics (GRAPE)
    University of Warsaw
    Institute of Labor Economics (IZA))

  • Krzysztof Makarski

    (Katedra Ekonomii Ilościowej Szkoła Główna Handlowa w Warszawie
    Group for Research in Applied Economics (GRAPE)
    Narodowy Bank Polski)

  • Piotr Zoch

    (Group for Research in Applied Economics (GRAPE)
    Wydział Nauk Ekonomicznych Uniwersytet Warszawski)

Abstract

We analyze the contribution of rising longevity to the increase in wealth inequality in the U.S. over the past seventy years. To do so, we construct an overlapping generations (OLG) model with multiple sources of inequality, carefully calibrated to the data. Our key finding is that improvements in old-age longevity have a substantial impact on wealth inequality, accounting for approximately half the effect of income inequality, which has been the focus of much of the existing literature. In contrast, the impact of tax changes is relatively minor. The contribution of rising longevity is expected to continue driving wealth inequality upward in the coming decades.

Suggested Citation

  • Joanna Tyrowicz & Krzysztof Makarski & Piotr Zoch, 2025. "Factors behind rising U.S. wealth inequality: a decomposition and policy implications," GRAPE Working Papers 101, GRAPE Group for Research in Applied Economics.
    • Handle: RePEc:fme:wpaper:101
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    File URL: https://grape.org.pl/WP/101_Makarski_website.pdf
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    More about this item

    Keywords

    wealth inequality; rising longevity; OLG;
    All these keywords.

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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