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Understanding 100 Years of the Evolution of Top Wealth Shares in the U.S.: What is the Role of Family Firms?

Author

Listed:
  • Andrew Atkeson
  • Magnus Irie
Abstract
We use a simple random growth model to study the role of changing dynamics of family firms in shaping the evolution of top wealth shares in the United States over the course of the past century. Our model generates a time path for top wealth shares remarkably similar to those found by Saez and Zucman (2016) and Gomez (2019) when the volatility of idiosyncratic shocks to the value of family firms is similar to that found for public firms by Herskovic, Kelly, Lustig, and Van Nieuwerburgh (2016) over the past 100 years. We also show that consideration of family firms contributes not only to overall wealth inequality, but also to considerable upward and downward mobility of families within the distribution of wealth. We interpret our results as indicating that improving our understanding of the economics of the process by which families found new firms and then, eventually, diversify their wealth is central to improving our understanding of the distribution of great wealth and its evolution over time.

Suggested Citation

  • Andrew Atkeson & Magnus Irie, 2020. "Understanding 100 Years of the Evolution of Top Wealth Shares in the U.S.: What is the Role of Family Firms?," NBER Working Papers 27465, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:27465
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    References listed on IDEAS

    as
    1. Xavier Gabaix & Jean‐Michel Lasry & Pierre‐Louis Lions & Benjamin Moll, 2016. "The Dynamics of Inequality," Econometrica, Econometric Society, vol. 84, pages 2071-2111, November.
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    12. Joachim Hubmer & Per Krusell & Anthony A. Smith Jr., 2020. "Sources of US Wealth Inequality: Past, Present, and Future," NBER Chapters, in: NBER Macroeconomics Annual 2020, volume 35, pages 391-455, National Bureau of Economic Research, Inc.
    13. Emmanuel Saez & Gabriel Zucman, 2016. "Editor's Choice Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(2), pages 519-578.
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    Cited by:

    1. Jesús Fernández-Villaverde & Oren Levintal, 2024. "The Distributional Effects of Asset Returns," NBER Working Papers 32182, National Bureau of Economic Research, Inc.
    2. Matthew Smith & Owen Zidar & Eric Zwick, 2020. "Top Wealth in America: New Estimates and Implications for Taxing the Rich," Working Papers 264, Princeton University, Department of Economics, Center for Economic Policy Studies..
    3. Owen Zidar, 2020. "Comment on "Sources of US Wealth Inequality: Past, Present, and Future"," NBER Chapters, in: NBER Macroeconomics Annual 2020, volume 35, pages 456-467, National Bureau of Economic Research, Inc.

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    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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