A micro perspective on r > g

Bibliographic Data

ID9725280
AuthorsRoberto Iacono (0000-0002-7538-8244, Norwegian University of Science and Technology, Trondheim, Norway, corresponding author), Elisa Palagi (0000-0002-9023-8308, Scuola Superiore Sant'Anna)
Year2023
Volume90
Issue358
Pages531-556
Publication date2023-04-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueEconomica (JOURNAL)
Journal identifiersISSN: 0013-0427 • E-ISSN: 1468-0335
PublisherWiley (PUBLISHER • GB)
DOI10.1111/ecca.12464
OpenAlexW4320726692
LanguageEN
Citations received1
References cited23

By exploiting large‐scale administrative data on income and estimated personal wealth in Norway from 2010 to 2018, this paper establishes the first micro‐level analysis of the difference between the real return on wealth and the real growth rate of total pre‐tax income, across the entire net wealth distribution. We show that for the top 40% of the distribution, the aggregate of 1.8% underestimates its micro counterpart , while the opposite happens for the bottom 60%. Moreover, for the bottom 50% of the net wealth distribution, it is indeed the case that . In addition, we run a simulation exercise demonstrating that the full distribution of —which has been shown to be positively associated with the position in the net wealth distribution—delivers a higher predictive power for the study of wealth inequality than simply focusing on the aggregate . All results are robust to the exclusion of imputed rents from the income definition

Aggregate (composite) · Distribution (mathematics) · Distribution of wealth · Econometrics · Economic rent · Economics · Income distribution · Inequality · Labour economics · Microeconomics · National wealth · Net income · Wealth distribution · Wealth elasticity of demand · Economic theories and models · Finance · Fiscal Policy and Economic Growth · Income, Poverty, and Inequality · Mathematics

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