nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2015‒09‒18
four papers chosen by
Maximo Rossi
Universidad de la República

  1. Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data By Emmanuel Saez; Gabriel Zucman
  2. Schooling Inequality, Returns to Schooling, and Earnings Inequality Evidence from Brazil and South Africa By Arden Finn; Murray Leibbrandt; David Lam
  3. The Challenge of Measuring UK Wealth Inequality in the 2000s By Facundo Alvaredo; Anthony B. Atkinson; Salvatore Morelli
  4. Gender Equality and Economic Growth in India: A Quantitative Framework By Pierre-Richard Agénor; Jan Mares; Piritta Sorsa

  1. By: Emmanuel Saez; Gabriel Zucman
    Abstract: This paper combines income tax returns with macroeconomic household balance sheets to estimate the distribution of wealth in the United States since 1913. We estimate wealth by capitalizing the incomes reported by individual taxpayers, accounting for assets that do not generate taxable income. We successfully test our capitalization method in three micro datasets where we can observe both income and wealth: the Survey of Consumer Finance, linked estate and income tax returns, and foundations' tax records. We find that wealth concentration was high in the beginning of the twentieth century, fell from 1929 to 1978, and has continuously increased since then. The top 0.1% wealth share has risen from 7%in 1978 to 22% in 2012, a level almost as high as in 1929. Top wealth-holders are younger today than in the 1960s and earn a higher fraction of the economy's labor income. The bottom 90% wealth share first increased up to the mid-1980s and then steadily declined. The increase in wealth inequality in recent decades is due to the upsurge of top incomes combined to an increase in saving rate inequality. We explain how our findings can be reconciled with Survey of Consumer Finances and estate tax data.
    Keywords: income tax, wealth inequality,
    Date: 2015–08
  2. By: Arden Finn; Murray Leibbrandt; David Lam
    Abstract: Human capital models imply that both the distribution of education and returns to education affect earnings inequality. Decomposition of these â..quantityâ.. and â..priceâ.. components have been important in understanding changes in earnings inequality in developed and developing countries. This paper provides theoretical and empirical analysis of the interactions between schooling inequality, returns to schooling and earnings inequality. We focus on two main questions. What is the relationship between inequality in schooling and inequality in earnings? How do changes in returns to schooling affect earnings inequality when returns differ by schooling level? We derive new analytical results that are used to guide empirical analysis of changes in earnings inequality in Brazil and South Africa. While both countries have had declines in schooling inequality, only Brazil has translated those into declines in earnings inequality. In South Africa, rising returns to schooling at the top level have offset equalizing changes in the schooling distribution.
    Date: 2015
  3. By: Facundo Alvaredo (Paris School of Economics, INET at the Oxford Martin School, and Conicet); Anthony B. Atkinson (Nuffield College, London School of Economics, and INET at the Oxford Martin School); Salvatore Morelli (CSEF, University of Naples and Institute for Economic Modelling at the INET Oxford)
    Abstract: The concentration of personal wealth is now receiving a great deal of attention – after having been neglected for many years. One reason is the growing recognition that, in seeking explanations for rising income inequality, we need to look not only at wages and earned income but also at income from capital, particularly at the top of the distribution. In this paper, we use evidence from existing data sources to attempt to answer three questions: (i) what is the share of total personal wealth that is owned by the top 1 per cent, or the top 0.1 per cent? (ii) is wealth much more unequally distributed than income? (iii) is the concentration of wealth at the top increasing over time? The main conclusion of the paper is that the evidence about the UK concentration of wealth post-2000 is seriously incomplete and significant investment is necessary if we are to provide satisfactory answers to the three questions.
    JEL: D3 H2
    Date: 2015–09–04
  4. By: Pierre-Richard Agénor; Jan Mares; Piritta Sorsa
    Abstract: This paper studies how public policies, including pro-women interventions, can raise female labour force participation and promote economic growth in India. The first part provides a brief review of gender issues in the country. The second part presents a gender-based OLG model, based on Agénor (2015) and Agénor and Canuto (2015), that accounts for women’s time allocation between market work, child rearing, human capital accumulation, and home production. Bargaining between spouses depends on relative human capital stocks. The model is calibrated and various experiments are conducted, including investment in infrastructure, conditional cash transfers, and a reduction in gender bias in the market place. The analysis shows raising female labour force participation with a package of pro-growth and pro-women policies could boost the growth rate by about 2 percentage points over time.
    Keywords: gender equality, female labour force participation, gender, India
    JEL: I15 I25 J16 O41
    Date: 2015–09–07

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