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Wealth Inequalities

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Handbook of Labor, Human Resources and Population Economics

Abstract

In many countries, wealth is highly concentrated, much more so than income. This review presents the long run trend of wealth inequality since the 1990s. Subsequently, it discusses the multitude of available datasets documenting and investigating wealth inequality and then critically evaluates the benefits and drawbacks of each. Following, an overview on descriptive studies of wealth inequality with a focus on augmented and pension wealth, portfolio composition, and intergenerational transmission is provided. Finally, the review details developments in structural models that explain the concentration of wealth. The evidence points to a sharp rise of wealth inequality beginning in the early 1990s through the mid-2010s in the United States. However, recent trends differ, for example, for Sweden and the United Kingdom. The last two decades have witnessed a virtual explosion of datasets on household wealth, including, notably, new internationally conformable databases such as the World Inequality Database, the Luxembourg Wealth Study Database, the Household Finance and Consumption Survey, and new administrative data from Nordic countries. The possibility to combine different datasets via record linkage or statistical matching further enlarges their research potential. Several new studies have expanded the concept of wealth from conventional marketable wealth to augmented wealth including pension and social security wealth. On the theoretical front, new modeling approaches have been devised to account for the extreme skewness in wealth distributions, including the introduction of heterogeneous rates of return by wealth class.

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Acknowledgments

Carsten Schröder gratefully acknowledges the financial support by the Deutsche Forschungsgemeinschaft (DFG), under contract number 430972113, and German Bundesministerium für Arbeit und Soziales.

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Authors and Affiliations

  1. German Institute for Economic Research (DIW Berlin), Berlin, Germany

    Johannes König & Carsten Schröder

  2. Freie Universität Berlin, Berlin, Germany

    Carsten Schröder

  3. New York University, New York, NY, USA

    Edward N. Wolff

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  1. Johannes König
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  2. Carsten Schröder
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  3. Edward N. Wolff
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Correspondence to Carsten Schröder .

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  1. UNU-MERIT & Princeton University, Maastricht, The Netherlands

    Klaus F. Zimmermann

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  1. Luxembourg Institute of Socio-Economic Research (LISER), Esch-sur-Alzette, Belval, Luxembourg

    Eva M. Sierminska

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König, J., Schröder, C., Wolff, E.N. (2020). Wealth Inequalities. In: Zimmermann, K.F. (eds) Handbook of Labor, Human Resources and Population Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-57365-6_168-1

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