How Do Inheritances Shape Wealth Inequality? Theory and Evidence from Sweden*
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Wealth Effect
March 2018 Weighing the Wealth Effect BY MARK ZANDI, BRIAN POI, SCOTT HOYT AND WAYNE BEST Abstract Consumers are powering the U.S. economy’s growth. Businesses, housing, government and global trade are all modestly contributing to growth, but it is the consumer who is key to the economy’s performance. Consumers are not spending with the abandon they did in the boom and bubble prior to the Great Recession, but they are stalwart in their spending. Benefiting consumers are strong economic tailwinds. The job market is healthy, creating lots of jobs across all pay scales in most regions of the country. With unemployment at near 4%, the economy is at full employment. Wage growth has been somewhat disappointing, but it is slowly picking up, and because of low inflation, real wage growth—nominal wage growth less inflation—is improving. Household leverage is low and credit is increasingly ample and cheap. Gasoline prices are off their recent bottom, but they remain low by most historical standards. Another critical tailwind to consumer spending has been rapidly rising asset prices—most important, stock and house values. Stock prices are up a robust 20% over the past 18 months, despite the recent market correction, and 300% since their nadir during the recession. House price gains have also been impressive, rising a robust nearly 10% to new highs over the past 18 months, and 40% since their nadir five years ago. The resulting increase in household wealth has supercharged consumer spending via the so-called wealth effect—the impact on consumer spending of changes in household wealth. -
What Does the Global Future Hold? Wealth and Income Inequality
What Does the Global Future Hold? Wealth and Income Inequality Facundo Alvaredo Paris School of Economics & IIEP-UBA-Conicet & INET at Oxford UN Environment Programme – International Resource Panel June 10th, 2021 The distribution of personal wealth is receiving a great deal of attention… …after being neglected for many years • US (Kopczuk-Saez, 2004; Saez-Zucman, 2016, 2019) • France (Garbinti-Goupille-Piketty, 2020) • UK (Alvaredo-Atkinson-Morelli, 2017, 2018) • Spain (Alvaredo-Saez, 2010; Martínez Toledano, 2018; Alvaredo-Artola, forthcoming) • Italy (Acciari, Alvaredo, Morelli, 2021) • Denmark, Belgium, Germany, Sweden, Switzerland • Credit Suisse (Shorrocks and Davis), Allianz, Merrill Lynch, UBS,… reports • ECB/ONS/FRB network of wealth surveys, and related papers and reports • OECD Guidelines for Micro Statistics on Household Wealth and Database • LWS • Etc… Part II trends in Global inCome inequality Figure 2.3.2a top 1% vs. bottom 50% national income shares in the us and Western europe, 1980–2016 US 22% 20% 18% Top 1% US 16% 14% Share of national income (%) income national of Share 12% Bottom 50% US 10% 1980 1985 1990 1995 2000 2005 2010 2015 Part II trends in Global inCome inequality Reason: increasing recognition that weSource: WID.worldneed (2017). See wir2018.wid.world to look for data series and notes.at capital incomes In 2016, 12% of national income was received by the top 1% in Western Europe, compared to 20% in the United States. In 1980, 10% of national income was received by the top 1% in Western Europe, compared to 11% in the United States. and Figure 2.3.2a not only at earnings top 1% vs. -
Rent-Seeking Behaviour and Ẓulm (Injustice/ Exploitation) Beyond Ribā-Interest Equation
A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Farooq, Mohammad O. Article Rent-seeking behaviour and ẓulm (injustice/ exploitation) beyond ribā-interest equation ISRA International Journal of Islamic Finance Provided in Cooperation with: International Shari'ah Research Academy for Islamic Finance (ISRA), Kuala Lumpur Suggested Citation: Farooq, Mohammad O. (2019) : Rent-seeking behaviour and ẓulm (injustice/exploitation) beyond ribā-interest equation, ISRA International Journal of Islamic Finance, ISSN 2289-4365, Emerald, Bingley, Vol. 11, Iss. 1, pp. 110-123, http://dx.doi.org/10.1108/IJIF-07-2018-0073 This Version is available at: http://hdl.handle.net/10419/236941 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have -
Lifecycle Patterns of Saving and Wealth Accumulation
Finance and Economics Discussion Series Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board, Washington, D.C. Lifecycle Patterns of Saving and Wealth Accumulation Laura Feiveson and John Sabelhaus 2019-010 Please cite this paper as: Feiveson, Laura, and John Sabelhaus (2019). \Lifecycle Patterns of Saving and Wealth Accumulation," Finance and Economics Discussion Series 2019-010. Washington: Board of Governors of the Federal Reserve System, https://doi.org/10.17016/FEDS.2019.010r1. NOTE: Staff working papers in the Finance and Economics Discussion Series (FEDS) are preliminary materials circulated to stimulate discussion and critical comment. The analysis and conclusions set forth are those of the authors and do not indicate concurrence by other members of the research staff or the Board of Governors. References in publications to the Finance and Economics Discussion Series (other than acknowledgement) should be cleared with the author(s) to protect the tentative character of these papers. Lifecycle Patterns of Saving and Wealth Accumulation Laura Feiveson John Sabelhaus July 2019 Abstract Empirical analysis of U.S. income, saving and wealth dynamics is constrained by a lack of high- quality and comprehensive household-level panel data. This paper uses a pseudo-panel approach, tracking types of agents by birth cohort and across time through a series of cross-section snapshots synthesized with macro aggregates. The key micro source data is the Survey of Consumer Finances (SCF), which captures the top of the wealth distribution by sampling from administrative records. The SCF has the detailed balance sheet components, incomes, and interfamily transfers needed to use both sides of the intertemporal budget constraint and thus solve for saving and consumption. -
Moral Economy, Unearned Income, and Legalized Corruption
Moral Economy, Unearned Income, and Legalized Corruption To be published in Neoliberalism and the Moral Economy of Fraud, 2016, ed. by D. Whyte and J. Wiegratz, Routledge ISBN: 9781138930377 Andrew Sayer, Lancaster University June 2015 ‘When plunder becomes a way of life for a group of men living in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it.’ (Frédéric Bastiat) Introduction: Moral Economy As French political economist Frédéric Bastiat appreciated, the origins of our contemporary economy had little to do with deliberations on what might be fair and morally justified and a lot to do with power. Yet our basic economic institutions are generally portrayed as legitimate and as accepted as such, though more as ‘facts of life’ than as rationally justified, and this acceptance is important for their continued existence. It would be a mistake to assume that because our political economic architecture is largely a product of power that there is no point in considering it in terms of moral and ethical questions of justice, fairness and human well-being. Unless we consider these things, we have little basis for criticising anything. Amartya Sen once drew a distinction between the ‘engineering’ and the ‘ethical’ approaches to economics (Sen, 1991). The former treats economies as machines that work in various ways that need to be described and explained, and which economists can fix if they work badly. The ethical approach treats economies as sets of social relations and practices that may be good or bad on moral and ethical grounds and need to be assessed in those terms. -
Marx and Keynes: from Exploitation to Employment
Institute for International Political Economy Berlin Marx and Keynes: from exploitation to employment Author: Fritz Helmedag Working Paper, No. 113/2019 Editors: Sigrid Betzelt, Eckhard Hein (lead editor), Martina Metzger, Jennifer Pedussel Wu, Martina Sproll, Christina Teipen, Achim Truger, Markus Wissen, Reingard Zimmer Marx and Keynes: from exploitation to employment Fritz Helmedag* Abstract Marx’s and Keynes’s analyses of capitalism complement each other well. In a rather general model including the public sector and international trade it is shown that the labour theory of value provides a sound foundation to reveal the factors influencing employment. Workers buy ‘necessaries’ out of their disposa- ble wages from an integrated basic sector, whereas the ‘luxury’ department’s revenues spring from other sources of income. In order to maximize profits, the wage good industry controls the level of unit labour costs. After all, effective demand governs the volume of work. On this basis, implications for economic policy are outlined. JEL-classification: E11, E12, E24 Keywords: Employment, Marx, Keynes, Surplus value * Chemnitz University of Technology, Economics Department, Thüringer Weg 7, D-09107 Chemnitz, Germany. Email: [email protected] Paper presented at the IPE 10th Anniversary Conference: Studying Modern Capi- talism – The Relevance of Marx Today, Berlin, 12-13 July 2018. 2 Fritz Helmedag 1. Surplus value and the rate of profit The essence of this article is that the great economic thinkers mentioned in the title make a good couple not only regarding their exposure of capitalism’s mal- functions but also, and more importantly, from an analytical point of view. -
Interpretations of Mill's Harm Principle and the Economic Implications Therein
Georgia State University ScholarWorks @ Georgia State University Political Science Theses Department of Political Science Fall 11-16-2012 Beyond Libertarianism: Interpretations of Mill's Harm Principle and the Economic Implications Therein Matthew A. Towery Georgia State University Follow this and additional works at: https://scholarworks.gsu.edu/political_science_theses Recommended Citation Towery, Matthew A., "Beyond Libertarianism: Interpretations of Mill's Harm Principle and the Economic Implications Therein." Thesis, Georgia State University, 2012. https://scholarworks.gsu.edu/political_science_theses/45 This Thesis is brought to you for free and open access by the Department of Political Science at ScholarWorks @ Georgia State University. It has been accepted for inclusion in Political Science Theses by an authorized administrator of ScholarWorks @ Georgia State University. For more information, please contact [email protected]. BEYOND LIBERTARIANISM: INTERPRETATIONS OF MILL’S HARM PRINCIPLE AND THE ECONOMIC IMPLICATIONS THEREIN by MATTHEW TOWERY Under the Direction of Mario Feit ABSTRACT The thesis will examine the harm principle, as originally described by John Stuart Mill. In doing so, it will defend that, though unintended, the harm principle may justify several principles of distributive justice. To augment this analysis, the paper will examine several secondary au- thors’ interpretations of the harm principle, including potential critiques of the thesis itself. INDEX WORDS: Mill, Harm principle, Libertarianism, Redistribution, -
The Morality of Money: American Attitudes Toward Wealth and the Income Tax
Indiana Law Journal Volume 70 Issue 1 Article 5 Winter 1994 The Morality Of Money: American Attitudes Toward Wealth and the Income Tax Marjorie E. Kornhauser Tulane Law School Follow this and additional works at: https://www.repository.law.indiana.edu/ilj Part of the Taxation-Federal Commons, and the Tax Law Commons Recommended Citation Kornhauser, Marjorie E. (1994) "The Morality Of Money: American Attitudes Toward Wealth and the Income Tax," Indiana Law Journal: Vol. 70 : Iss. 1 , Article 5. Available at: https://www.repository.law.indiana.edu/ilj/vol70/iss1/5 This Article is brought to you for free and open access by the Law School Journals at Digital Repository @ Maurer Law. It has been accepted for inclusion in Indiana Law Journal by an authorized editor of Digital Repository @ Maurer Law. For more information, please contact [email protected]. The Morality Of Money: American Attitudes Toward Wealth and the Income Taxt MARJORIE E. KORNHAUSER* Wealth fascinates Americans. Alexis de Tocqueville said in 1835: "'The love of wealth is... at the bottom of all that the Americans do. "" In reality, American feelings about wealth are much more complex and ambiguous than Tocqueville claims. Americans fear and disdain wealth as well as love it.' We differentiate types of money and wealth, despite the economists' claims that all money is fungible. In particular, Americans imbue earned income with an aura of morality and virtuousness that unearned income, particularly inherited income, does not have.' Consequently, we Americans admire the person who acquires her wealth by means of her own talent and industry, while at the t Q 1993 by Marjorie E. -
Wealth Effects on Household Final Consumption: Stock and Housing Market Channels
International Journal of Financial Studies Article Wealth Effects on Household Final Consumption: Stock and Housing Market Channels Yener Coskun 1,* ID , Burak Sencer Atasoy 2 ID , Giacomo Morri 3 and Esra Alp 4 1 Capital Markets Board of Turkey and Middle East Technical University, Eski¸sehirYolu 8.Km No:156, Ankara 06530, Turkey 2 Turkish Treasury, Inonu Blv. No 36 Emek, Ankara 06510, Turkey; [email protected] 3 SDA Bocconi School of Management, 20136 Milano, Italy; [email protected] 4 Economics Department, Social Sciences Institute, Dokuz Eylül University, Izmir 35160, Turkey; [email protected] * Correspondence: [email protected] Received: 22 December 2017; Accepted: 22 May 2018; Published: 5 June 2018 Abstract: The study primarily explores the linkage between wealth effects, arising from stock and housing market channels, and household final consumption for 11 advanced countries over the period from 1970 Q1 to 2015 Q4. As a modelling strategy, we employ regression analysis through the common correlated effects mean group (CCEMG) estimator, as well as Durbin–Hausman cointegration and Dumitrescu and Hurlin (2012) causality tests. The study provides various pieces of evidence through whole-panel and country-level analyses. In this respect, we find that consumption is mostly explained by income and housing wealth is positively and significantly correlated with consumption. As counter-intuitive evidence, we detect a negative linkage between consumption and stock wealth. The evidence also suggests a long-run cointegration relationship among consumption, income, interest rates, housing wealth, and stock wealth. Moreover, we find bidirectional causality between consumption and income, stock wealth, housing wealth, and interest rates. -
Theorising and Mapping Modern Economic Rents
Theorising and mapping modern economic rents Mariana Mazzucato Professor in the Economics of Innovation and Public Value, Director, UCL Institute for Innovation and Public Purpose Josh Ryan-Collins Head of Finance and Macroeconomics, Senior Research Fellow, UCL Institute of Innovation and Public Purpose Giorgos Gouzoulis Reseach Fellow, UCL Institute of Innovation and Public Purpose UCL Institute for Innovation and WORKING PAPER Public Purpose WP 2020—13 About the Institute for Innovation and Public Purpose The UCL Institute for Innovation and Public Purpose (IIPP) aims to develop a new framework for creating, nurturing and evaluating public value in order to achieve economic growth that is more innovation-led, inclusive and sustainable. We intend this framework to inform the debate about the direction of economic growth and the use of mission-oriented policies to confront social and technological problems. Our work will feed into innovation and industrial policy, financial reform, institutional change, and sustainable development. A key pillar of IIPP's research is its understanding of markets as outcomes of the interactions between different actors. In this context, public policy should not be seen as simply fixing market failures but also as actively shaping and co-creating markets. Re-focusing and designing public organisations around mission-led, public purpose aims will help tackle the grand challenges facing the 21st century. IIPP is housed in The Bartlett, a leading global Faculty of the Built Environment at University College London (UCL), with its radical thinking about space, design and sustainability. This IIPP Working Paper Series is published electronically at https://www.ucl.ac.uk/bartlett/public-purpose/publications/working-papers. -
Wealth Effects on Consumption Across the Wealth Distribution: Empirical Evidence
A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Arrondel, Luc; Lamarche, Pierre; Savignac, Frédérique Working Paper Wealth effects on consumption across the wealth distribution: empirical evidence ECB Working Paper, No. 1817 Provided in Cooperation with: European Central Bank (ECB) Suggested Citation: Arrondel, Luc; Lamarche, Pierre; Savignac, Frédérique (2015) : Wealth effects on consumption across the wealth distribution: empirical evidence, ECB Working Paper, No. 1817, ISBN 978-92-899-1630-1, European Central Bank (ECB), Frankfurt a. M. This Version is available at: http://hdl.handle.net/10419/154250 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu Working Paper Series Luc Arrondel, Pierre Lamarche and Wealth effects on consumption Frédérique Savignac across the wealth distribution: empirical evidence No 1817 / June 2015 Note: This Working Paper should not be reported as representing the views of the European Central Bank (ECB). -
Luxury Good Demand
Luxury Good Demand Author: Kimberly Caserta Persistent link: http://hdl.handle.net/2345/572 This work is posted on eScholarship@BC, Boston College University Libraries. Boston College Electronic Thesis or Dissertation, 2008 Copyright is held by the author, with all rights reserved, unless otherwise noted. Luxury Good Demand Kim Caserta Adviser: Robert Murphy 1. Introduction Luxury goods account for a growing share of consumer expenditure. The luxury good industry, which produces and sells clothes, leather goods, shoes, silk scarves and neckties, watches, jewelry, perfume, and cosmetics, reached the $157 billion mark in 2007 [Thomas (2007) p. 5]. A strengthening economy plus more disposable income among other things has led this market to realize significant growth in recent years. Consistently with the empirical evidence on the faster increase of the income and wealth of the top 1% relative to the rest of the population, the growth rate of the luxury goods market has far exceeded that of aggregate consumption over the past decade [see Aït- Sahalia, Y., Parker, J. and Yogo, M. (2003)]. Consumers are buying up everything from expensive clothes and diamond-encrusted handbags to private jets and designer toilets. The desire for luxury goods in America has reached a point that consumers will use any and all resources to get their hands on them. Despite the emotional trauma and economic devastation, “in September 2005, victims of Hurricane Katrina used their Red Cross cards to buy $800 bags at the Louis Vuitton boutique in Atlanta” [Thomas (2007) p.169]. As economist Robert Frank has pointed out, Americans are in the grip of “Luxury Fever.” Although there has been much observation of the consumer luxury good trend in the United States, it is not clear what factors are causing this trend which is what I tend to explore.