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Thomas Fischer . Photo

Thomas Fischer

Associate professor

Thomas Fischer . Photo

Determinants of Wealth Inequality and Mobility in General Equilibrium

Author

  • Thomas Fischer

Summary, in English

What determines inequality and mobility of wealth? This paper quantifies in closed form both the bottom and the top (Pareto) tail of the distribution for a rich continuous-time model. The distribution is especially shaped by bequest motives, demographics, and the asset portfolio composition under idiosyncratic wealth risk. Factors that increase inequality also reduce mobility. The model - enriched by a realistic income process and non-trivial portfolio constraints - is solved in general equilibrium and calibrated to match US evidence. A bequest tax is shown to reduce inequality and increase mobility. Several partial-equilibrium intuitions do not carry over into general equilibrium.

Department/s

  • Centre for Economic Demography
  • Department of Economics

Publishing year

2019

Language

English

Publication/Series

Working Papers

Issue

2019:22

Document type

Working paper

Topic

  • Economics

Keywords

  • wealth inequality
  • mobility of wealth
  • portfolio selection
  • fat tails
  • bequest tax
  • C68
  • D31
  • E21
  • G11
  • H23

Status

Published