Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/235134
Authors: 
Haliassos, Michael
Jansson, Thomas
Karabulut, Yigitcan
Year of Publication: 
2021
Series/Report no.: 
IMFS Working Paper Series No. 161
Publisher: 
Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS), Frankfurt a. M.
Abstract: 
The authors present evidence of a new propagation mechanism for wealth inequality, based on differential responses, by education, to greater inequality at the start of economic life. The paper is motivated by a novel positive cross-country relationship between wealth inequality and perceptions of opportunity and fairness, which holds only for the more educated. Using unique administrative micro data and a quasi-field experiment of exogenous allocation of households, the authors find that exposure to a greater top 10% wealth share at the start of economic life in the country leads only the more educated placed in locations with above-median wealth mobility to attain higher wealth levels and position in the cohort-specific wealth distribution later on. Underlying this effect is greater participation in risky financial and real assets and in self-employment, with no evidence for a labor income, unemployment risk, or human capital investment channel. This differential response is robust to controlling for initial exposure to fixed or other time-varying local features, including income inequality, and consistent with self-fulfilling responses of the more educated to perceived opportunities, without evidence of imitation or learning from those at the top.
Subjects: 
Household finance
wealth inequality
propagation of inequality
education
opportunity
refugees
JEL: 
G5
E21
E44
D31
D1
Document Type: 
Working Paper

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