Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/230564 
Year of Publication: 
2019
Series/Report no.: 
Queen’s Economics Department Working Paper No. 1411
Publisher: 
Queen's University, Department of Economics, Kingston (Ontario)
Abstract: 
We characterize the distribution of permanent-income and quantify the value of assets and human capital in lifetime wealth portfolios. We estimate the distribution of human wealth using nonparametric identification results that allow for state-dependent stochastic discounting and unobserved heterogeneity. The approach imposes no restrictions on income processes or utility. Accounting for the value of human capital delivers a different view of inequality: (i) in 2016 the top 10% share of permanent-income was 1/3 lower than the corresponding share of assets; (ii) however, since 1989, the top 10% share of permanent-income has grown much faster than the corresponding share of assets. Human wealth has a mitigating influence on inequality, but this effect has waned over time due to the growing importance of assets in lifetime wealth portfolios. We find that consumption expenditures are tightly linked to permanent-income; however, liquidity constraints can lead to substantial deviations below permanent-income.
Subjects: 
Wealth
Human Capital
Permanent Income
Consumption
Inequality
JEL: 
E2
E21
D31
I24
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.