Skip to:
  1. Main navigation
  2. Main content
  3. Footer
Working Paper

Accounting for Wealth Concentration in the United States

Download pdf

We assess the empirical relevance of different macroeconomic modeling approaches to wealth concentration, using the joint distribution of earnings, capital income and net worth in combination with an OLG model of household heterogeneity. We find large earnings disparities to be the primary source of US wealth concentration. This reflects the fact that labor income, from salaries but also from entrepreneurship, is a major income source for top income and wealth groups in the data. Bequests and differences in rates of return on capital together explain about half the holdings of the wealthiest of households, but much less for the rest.

Topics
Economic equity and inclusion
Financial well-being
10.20.2022ISSN 2573-7953 WP 22-28DOI 10.26509/frbc-wp-202228
Keywords Wealth Inequality, Income and Earnings Distribution, Factor Share of Income, Bequests, Rate of Return Heterogeneity
JEL Classification Codes D31, D33, E21

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.

Suggested Citation

Kaymak, Barış, David Leung, and Markus Poschke. 2022. “Accounting for Wealth Concentration in the United States.” Federal Reserve Bank of Cleveland, Working Paper No. 22-28. https://doi.org/10.26509/frbc-wp-202228