Working Paper: CEPR ID: DP10368
Authors: Wojciech Kopczuk
Abstract: I discuss available evidence about the evolution of top wealth shares in the United States over the last one hundred years. The three main approaches ? Survey of Consumer Finances, estate tax multiplier techniques and capitalization method ? generate generally consistent findings until mid-1980s but diverge since then, with capitalization method showing a dramatic increase in wealth concentration and the other two methods showing at best a small increase. I discuss strengths and weaknesses of different approaches. The increase in capitalization estimates since 2000 is driven by a dramatic and surprising increase in fixed income assets. There is evidence that estate tax estimates may not be sufficiently accounting for mortality improvements over time. The non-response and coverage issues in the SCF are a concern. I conclude that changing nature of top incomes and the increased importance of self-made wealth may explain difficulties in implementing each of the methods and account for why the results diverge.
Keywords: wealth; inequality
JEL Codes: D31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| fixed income asset growth (G12) | increase in top wealth share (D33) |
| mortality rates (I12) | accuracy of wealth estimates derived from estate taxes (H24) |
| source of income (E25) | wealth concentration trends (D31) |
| shifts in income sources (E25) | divergence in findings between methods (C00) |