Quantitative Models of Wealth Inequality: A Survey

43 Pages Posted: 20 Apr 2015 Last revised: 27 Apr 2015

See all articles by Mariacristina De Nardi

Mariacristina De Nardi

University College London, Economics Dpt.; Federal Reserve Bank of Chicago; National Bureau of Economic Research (NBER) - Public Economics

Date Written: April 2015

Abstract

While in the data wealth is concentrated in the hands of a small number of rich people and the saving rate of the rich is high, many models used for quantitative policy evaluation fail to match these facts. In addition, some of the models that succeed in matching these facts have radically different policy implications, depending on the nature and strength of the saving motives assumed. This paper surveys the savings mechanisms proposed so far (preference heterogeneity, transmission of bequests and human capital across generations, entrepreneurship, and high earnings risk for the top earners) and argues that more work is needed to understand wealth inequality and the saving motives behind it, and to evaluate policy more reliably.

Suggested Citation

De Nardi, Mariacristina, Quantitative Models of Wealth Inequality: A Survey (April 2015). NBER Working Paper No. w21106, Available at SSRN: https://ssrn.com/abstract=2596435

Mariacristina De Nardi (Contact Author)

University College London, Economics Dpt. ( email )

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National Bureau of Economic Research (NBER) - Public Economics ( email )

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