The Wealth Dynamics of Entrepreneurship for Black and White Families in the U.S.

Among black and white families, entrepreneurs hold disproportionately more wealth than workers. Black entrepreneurs hold a lower fraction of black family wealth than white entrepreneurs hold of white family wealth, because black families have a lower rate of entrepreneurship. Black and white entrepreneurs have more upward and less downward mobility in the wealth distribution than black and white workers, respectively. The black entrepreneurs and white entrepreneurs have similar upward mobility and black entrepreneurs less downward mobility in the wealth distribution. The entrepreneurs save at higher rates than workers, and the saving rates of black entrepreneurs and white entrepreneurs are not found to differ.     

Top Wealth Shares in Australia 1915–2012

Combining data from surveys, inheritance tax records, and rich lists, we estimate top wealth shares for Australia from World War I until the present day. We find that the top 1 percent share declined by two‐thirds from 1915 until the late 1960s, and rose from the late 1970s to 2010. The recent increase is sharpest at the top of the distribution, with the top 0.001 percent wealth share tripling from 1984 to 2012. The trend in top wealth shares is similar to that in Australian top income shares (though the drop in the first half of the twentieth century is larger for wealth than income shares). Since the early twentieth century, top wealth shares in Australia have been lower than in the U.K. and U.S.     

DRUG POLICY AND INTERGENERATIONAL INCOME MOBILITY IN THE UNITED STATES

A conviction for drug possession blocks some of the most common pathways through which individuals from low income families achieve upward economic mobility in the United States, such as access to higher education, entry‐level employment, and military service. These considerations are of growing importance because the number of drug‐related arrests have nearly quadrupled since 1980. This article estimates the effect of a conviction for drug possession on earnings mobility using a sample of individuals born between 1980 and 1984, some of the first cohorts to come of age in the context of intensive U.S. drug criminalization and enforcement. To distinguish the effect of a drug conviction from the effect of drug use or general criminality, I compare mobility among individuals with drug convictions to control groups who self‐report significant drug use and who have had interactions with the criminal justice system that did not lead to a drug conviction. I find that relative to these groups, a drug conviction reduces the probability of transitioning upward from various points in the lower half of the income distribution by 10–15 percentage points, or as much as 50%, and that these effects are substantially stronger for non‐whites than for whites. These findings suggest that a policy of decriminalizing nonviolent drug possession would substantially increase intergenerational mobility among low income populations, and this effect should be weighed alongside more conventional costs and benefits in formulating optimal drug policy. (JEL J38, J15, K42)     

A New Look at Intergenerational Mobility in Germany Compared to the U.S

Motivated by contradictory evidence on intergenerational mobility in Germany, I present a cross‐country comparison of Germany and the U.S., reassessing the question of whether intergenerational mobility is higher in Germany than in the U.S. I can reproduce the standard result from the literature, which states that the German intergenerational elasticity estimates are lower than those for the U.S. However, based on highly comparable data, even a reasonable degree of variation in the sampling rules leads to similar estimates in both countries. I find no evidence for non‐linearities along the fathers' earnings distribution. In contrast, the analysis shows that mobility is higher for the sons at the lowest quartile of the sons' earnings distribution in both countries. In Germany this result is mainly driven by a high downward mobility of sons with fathers in the upper middle part of the earnings distribution. The corresponding pattern is clearly less pronounced in the U.S.     

Mobility of Top Incomes in Germany

I analyze German top income mobility using micro‐level panel data of personal income tax returns which are highly representative for top income taxpayers for the years 2001–06. Top income mobility is assessed in three dimensions: (i) persistence in top income fractiles and its stability over time, (ii) measures of individual mobility that are not dependent on the fractile size: the degree of mobility between equally sized groups and mobility in ranks, and (iii) mobility's impact on top income shares. Persistence in top income fractiles is comparatively high and fairly stable across the analyzed period. Top income recipients are less prone to downward mobility and see less variation in annual ranks than less rich tax units. Mobility's impact on income concentration is moderate. The top percentile's share is reduced by roughly 5 percent over six years.     

Changes in the wage structure,family income,and children's education

We exploit the changes in the distribution of family income to estimate the effect of parental resources on college education. Our strategy exploits the fact that families at the bottom of the income distribution were much poorer in the 1990s than they were in the 1970s, while the opposite is true for families in the top quartile of the distribution.  Our estimates suggest large effects of family income on enrollments.  For example, we find that a 10 percent increase in family income is associated with a 1.4 percent increase in the probability of attending a four-year college.     

THE RELATIONSHIP BETWEEN CONSUMPTION, INCOME AND WEALTH IN HONG KONG

Abstract. This paper estimates a consumption function for Hong Kong along the lines of the standard life‐cycle model. I find a stable relationship between consumption, labour income and wealth with plausible long‐run estimates of the implied marginal propensity to consume out of income and wealth. The marginal propensity to consume out of housing wealth is estimated to be lower than in other industrialized economies, which is consistent with a relatively uneven distribution of wealth in Hong Kong. Arithmetically, the decline in housing wealth in Hong Kong since 1997 can more than account for the weakness of consumption since then.     

How Fat is the Top Tail of the Wealth Distribution?

Differential unit non‐response in household wealth surveys biases estimates of top tail wealth shares downward. Using Monte Carlo evidence, I show that adding only a few extreme observations to wealth surveys is sufficient to remove the downward bias. Combining extreme wealth observations from Forbes World's billionaires with the Survey of Consumer Finances, the Wealth and Assets Survey, and the Household Finance and Consumption Survey, I provide new improved estimates of top tail wealth in the United States, the United Kingdom, and nine euro area countries. These new estimates indicate significantly higher top wealth shares than those calculated from the wealth surveys alone.     

GLOBAL AND DISAGGREGATED MEASURES OF EARNINGS MOBILITY: EVIDENCE FROM FIVE EUROPEAN COUNTRIES

This paper offers the first application of the local approximation method pioneered by Schluter and Trede (2003) for the Shorrocks mobility indices across the earnings distribution for a range of European Countries covering the main European social models: Denmark, Germany, Spain, the UK and Italy in the pre‐accession EU (1994‐2001). This insightful approach allows us to offer a global and disaggregate analysis of mobility as proportionate change in inequality and hence provide the reader with a full set of information to make his/her own judgment about the extent of mobility and country ranking. Specifically, we investigate the degree to which mobility is driven by low or high earners and how this picture changes across three different earnings measures: full‐time full‐year working, adding part‐time working and then part‐year working. Our results draw out some general key facts. First of all the vast bulk of the measured mobility occurs in the tails especially the lower tail with at least half of the index driven by mobility in the bottom earning quintile. Second, in the top 20 percent of the distribution there are few movements of earnings that effect the level of permanent inequality except in Denmark. Third, no country has a clear dominance for mobility across the full earnings distribution but Denmark differs from the other countries with clearly greater mobility in the middle and at the top. Finally, we find that with the exception of Denmark and Italy, mobility does not lead to clear convergence to the mean but rather to points around 0.7‐0.8 and 1.5 to 2 times the mean.     

Political ideology and the intragenerational prospect of upward mobility

We re-examine the effect of prospects of upward mobility (POUM) on the support for redistribution. Unlike previous studies, we analyse this relation in an intragenerational context and consider the moderating effect of political ideology through which mobility expectations affect redistributive preferences. We find that the POUM effect is conditional on political preferences. That is, we find that only for right-wing individuals expected upward income mobility negatively affects support for redistribution. Left-wing individuals prefer redistribution, regardless of expected upward income movements.     

Wealth Concentration over the Path of Development: Sweden, 1873–2006*

We study wealth concentration in Sweden over 130 years, from the beginning of industrialization until the present day. Our series are based on new evidence from estate and wealth tax data, foreign and domestic family firm‐wealth, and pension wealth estimates. We find that Swedish wealth concentration was high in the agrarian state, and changed little during early industrialization. From World War I until about 1950, the richest percentile lost ground to high‐income earners in the rest of the top‐wealth decile. This equalization continued postwar; the entire top decile lost‐out relative to the rest of the population. Around 1980, wealth compression stopped and inequality increased. We approximate the effects of international flows and find that the recent increase in wealth inequality is probably larger than what official estimates suggest.     

Redistribution Policies under Capital Market Imperfection

We establish the existence and stability of the long‐run wealth distribution in a credit constrained economy by applying the monotonicity condition developed by H. Hopenhayn and E. Prescott. There should emerge an egalitarian society in which all families experience upward and downward mobility, although a society of persistent inequality may occur in which rich entrepreneurs and poor lenders remain immobile between classes. The speed of transition from the latter to the former is shown to depend on the design of redistribution policies. Simulation results show that this occurs more rapidly when the government favours relatively rich lenders. JEL Classification Numbers: D31, G33, O12.     

Risk management,housing and stockholding

This article investigates the possible explanations of the stockholding puzzle by focusing on housing and other uninsurable risks (associated with income, health and business). Taking the French household wealth survey (Patrimoine 2004, French National Statistical Institute), we find that the share of financial wealth invested in stocks depends on transaction and information costs, risk aversion, exposure to real estate risk and, to a lesser extent, labour market risk. These results are obtained by controlling for endogenous home ownership status.     

The Gender Wealth Gap in Europe: Application of Machine Learning to Predict Individual-level Wealth

This article provides comparative estimates of the gender wealth gaps for 22 European countries, employing data from the Household Finance and Consumption Survey. The data on wealth are collected at the household level, while individual-level data are needed for the estimates of gender wealth gaps. We propose a novel approach using machine learning and model averaging methods to predict individual-level wealth data for multi-person households. Our results suggest that random forest performs best as the predicting tool for this exercise, outperforming elastic net and Bayesian model averaging. The estimated gender wealth gaps tend to be in favor of men, especially at the top of the wealth distribution. Men have 24 percent more wealth than women on average. We also find that a high home ownership rate is associated with a smaller country-level gender wealth gap. Our estimates suggest that the individual-level wealth inequality is on average 3 pp higher than the household-level wealth inequality in multi-member households.     

CHANGES IN CANADIAN FAMILY INCOME AND FAMILY CONSUMPTION INEQUALITY BETWEEN 1978 AND 1992

This paper uses Canadian cross-sectional income and expenditure data to examine changes in the distribution of family income and family consumption during the period 1978 to 1992. Family consumption data are analyzed because in the presence of intertemporal consumption smoothing, the cross-sectional distribution of consumption may characterize the distribution of lifetime wealth. I find that both Canadian family income inequality and Canadian family consumption inequality moved countercyclically. In addition, both Canadian family income inequality and Canadian family consumption inequality trended upward over the period; however, the change in family consumption inequality was much smaller than the change in family income inequality, suggesting that inequality in the distribution of lifetime wealth may have changed much less than is suggested by changes in the distribution of income.     

代际间的职业流动与收入流动——来自中国城乡家庭的经验研究

本文通过对中国城乡家庭代际间的职业流动与收入流动进行实证研究,得出以下结论:(1)城镇家庭子女的职业随其职业生涯的发展有向父辈职业"回归"的趋势,而农村家庭中父代从事非农职业有助于子女实现职业的向上流动。(2)子女受教育程度的提高有利于代际间职业的向上流动,但其父辈的社会经济特征也对代际间的职业传承和流动有显著的影响。(3)代际之间职业的传承在一定程度上阻碍了代际间的收入流动,代际职业传承对高收入家庭的代际收入弹性影响更强。     

Intergenerational Wealth Mobility in France, 19th and 20th Century

This paper examines intergenerational wealth mobility between fathers and children in France between 1848 and 1960. Considering wealth mobility in the long run requires taking into account not only positional mobility (that is, how families move within a given distribution of wealth), but also structural mobility induced by changes in the distribution of wealth. Such changes are related to two structural phenomena: in the nineteenth century, the rising number of individuals leaving no estate at death and, after World War I, the decline in the number of the very rich who could live off their wealth. The paper studies the movements between these groups and estimates the intergenerational elasticity of wealth, taking into account the persistence at the bottom and at the top.     

The Structure and Distribution of Household Wealth in Australia

This article uses data from the second wave of the Household, Income and Labour Dynamics in Australia (or HILDA) Survey to provide an overview of the structure and distribution of household wealth in Australia. The data confirm that wealth is very unequally distributed, with the bottom half of the distribution owning less than 10 per cent of total household net worth, while the wealthiest 10 per cent account for 45 per cent. The article also includes an analysis of the factors associated with household wealth that indicates that wealth is significantly related to a range of factors including age, country of birth, parental occupational status, education, marital status, working hours, income, self‐reported savings behaviour, a willingness to take risks and even various lifestyle behaviours, such as smoking and alcohol consumption.     

Gender differences in occupational mobility – evidence from Portugal

In this paper we evaluate if gender influences the pattern of upward and downward occupational mobility. With data for Portugal in the period 1998–2009, we find that women have a lower probability of upward mobility and a higher probability of downward mobility. The results also reveal the importance of some other determinant factors, especially education and initial occupation. Additionally, considering an analysis in which we group occupations into four ranked categories (low, medium-low, medium-high, and high level occupations), we confirm that the determinants of occupational mobility depend on the ranking of the initial occupation. This analysis allows us to conclude that the unfavorable pattern of occupational mobility in the case of women is due, essentially, to the disadvantage they have at the bottom of the distribution. On the contrary, in the top occupations, the results suggest the existence of equality between genders.     

MEASURING THE IMPACT OF VALUING HEALTH INSURANCE ON LEVELS AND TRENDS IN INEQUALITY AND HOW THE AFFORDABLE CARE ACT OF 2010 COULD AFFECT THEM

A substantial part of the U.S. inequality literature focuses on yearly levels and trends in pre‐tax, post‐transfer cash income and its distribution over time and finds that median income appears to be stagnating, with income growth primarily coming at higher income levels. When we use data from the Current Population Survey for 1995–2008 and add the value of employer‐ and government‐provided health insurance coverage, not only does it increase the upward trend in the level of resources controlled by Americans, but also reduces the level of inequality in these resources and its upward trend. We then provide a highly stylized example of this broader income measure's value in capturing the impact of two key provisions of the Affordable Care Act of 2010—an expansion in Medicaid and the provision of subsidies to lower‐income families for purchasing private coverage on state‐run exchanges. Even though these incremental expansions build on existing systems of government‐provided health insurance, we find that the vast majority of the benefits would still accrue to the bottom three deciles of the income distribution when we include the value of employer‐ and government‐provided health insurance in our expanded yearly income measure. (JEL D31, H51, I14)