What Do We Know About Evolution of Top Wealth Shares in the United States?

27 Pages Posted: 8 Dec 2014

See all articles by Wojciech Kopczuk

Wojciech Kopczuk

Columbia University - Graduate School of Arts and Sciences - Department of Economics; Columbia University - School of International & Public Affairs (SIPA); National Bureau of Economic Research (NBER)

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Date Written: December 2014

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.

Suggested Citation

Kopczuk, Wojciech, What Do We Know About Evolution of Top Wealth Shares in the United States? (December 2014). NBER Working Paper No. w20734, Available at SSRN: https://ssrn.com/abstract=2535186

Wojciech Kopczuk (Contact Author)

Columbia University - Graduate School of Arts and Sciences - Department of Economics ( email )

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Columbia University - School of International & Public Affairs (SIPA)

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United States

National Bureau of Economic Research (NBER) ( email )

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