scholarly journals Universal Baby Bonds Reduce Black-White Wealth Inequality, Progressively Raise Net Worth of All Young Adults

2019 ◽  
Vol 47 (1) ◽  
pp. 3-19 ◽  
Author(s):  
Naomi Zewde
Keyword(s):  
Young Adults ◽  
Panel Study ◽  
Wealth Inequality ◽  
The United States ◽  
Household Wealth ◽  
Racial Inequalities ◽  
Net Worth ◽  
Distribution Of Wealth ◽  
Wealth Inequalities ◽  
Racial Lines

The distribution of wealth has grown increasingly unequal, especially along racial lines. Lawmakers and researchers propose to address the issue with universal “baby bonds,” paid to every newborn and preserved until young adulthood. Bond values are tied inversely to wealth up to a $50,000 maximum investment. This study uses longitudinal data from the Panel Study of Income Dynamics on the assets of young adults to simulate contemporary racial inequalities under a counterfactual policy environment in which the United States had administered baby bonds when the current cohort of young adults were newborns. Initial bond values are defined categorically by quintiles of household wealth observed in 1989 and 1994, smoothed across the inverse hyperbolic sine of household wealth, and then assumed to grow at 2% per year through 2015. Without baby bonds, young White Americans hold approximately 16 times the wealth of young Black Americans at the median ($46,000 vs. $2,900). Baby bonds reduce the disparity to a factor of 1.4 ($79,143 vs. $57,845), in the absence of intervening behavioral responses to the policy. The share held by the top decile decreases from 72% to 65%, marginally approaching the more egalitarian societies. Baby bonds considerably narrow wealth inequalities while simultaneously improving the net asset position of young adults and alleviating asset concentration.

A People’s Portfolio of the United States

Divested ◽  
2020 ◽  
pp. 137-156
Author(s):  
Ken-Hou Lin ◽  
Megan Tobias Neely
Keyword(s):  
United States ◽  
Wealth Inequality ◽  
The United States ◽  
Household Wealth ◽  
Wealth Accumulation ◽  
Social Scientists ◽  
Distribution Of Wealth ◽  
Baby Boomer Generation ◽  
Social Class Inequality

This chapter focuses on how finance has transformed household wealth—a trend with long-term implications for how social-class inequality becomes entrenched. It first reviews the uneven distribution of wealth in the United States. Wealth inequality has risen since the last quarter of the 20th century. Today, fewer American families have sufficient means to accumulate wealth over time, and the concentration of capital in the hands of a select few has widened the fault line between the richest and the rest. The chapter also examines how the distribution of wealth has changed across generations—more precisely, what social scientists call “cohorts.” That is, wealth for the baby boomer generation differs greatly from wealth among the millennials. Since wealth accumulation develops over the course of a person’s life, families in young adulthood and near retirement are considered.

scholarly journals Recent Trends in the Size Distribution of Household Wealth

1998 ◽  
Vol 12 (3) ◽  
pp. 131-150 ◽  
Author(s):  
Edward N Wolff
Keyword(s):  
United States ◽  
Racial Disparities ◽  
Size Distribution ◽  
The United States ◽  
Household Wealth ◽  
Survey Of Consumer Finances ◽  
Net Worth ◽  
Distribution Of Wealth ◽  
Consumer Finances ◽  
Recent Trends

Based on the Survey of Consumer Finances, the distribution of wealth in the United States became much more unequal in the 1980s and that trend continued, albeit at a slower pace, in the 1990s. The only households that saw their mean net worth rise in absolute terms between 1983 and 1995 were those in the top 20 percent and the gains were particularly strong for the top one percent. All other groups were particularly strong for the top one percent. All other groups suffered real wealth losses, including the median household, and declines were particularly precipitous at the bottom. Racial disparities widened, and young households also lost out over this period.

scholarly journals Monetary Policy and Inequality

2020 ◽  
Vol 12 (4) ◽  
pp. 006-017
Author(s):  
Alexander A. Rakviashvili ◽  
Keyword(s):  
Monetary Policy ◽  
Wealth Inequality ◽  
The United States ◽  
Central Banks ◽  
Distribution Of Wealth ◽  
The Past ◽  
High Propensity ◽  
Debt Market ◽  
The Impact ◽  
American Economy

The article provides a literature review of studies of the impact of monetary policy on income and wealth inequality. Based on the analysis and systematization of the articles mainly written over the past 25–30 years as well as articles written by central bank authorities, the main approaches to assessing the extent to which the Fed's actions are responsible for the growth of wealth inequality in the United States, which began in the 1970s, are identified. It was revealed that the relative unanimity of economists on this issue was replaced by significant pluralism of opinions after the crisis of 2007–2009. Among other reasons this was caused by the activity of central banks and their use of non-conventional approaches in conducting the monetary policy. In addition, the channels through which the actions of central banks affect the distribution of wealth in the economy are identified. In total, five such channels were singled out. Thus, changes in the monetary policy affect the debt market and the structure of assets and liabilities of households, while households with fixed incomes and with a high propensity to use cash are more likely to suffer losses during the expansionary monetary policy. And the fifth channel, which is less popular among the economists, the "Cantillon effect", leads to an increase in the wealth of the first recipients of the issued money at the expense of those who are farthest from the center of emission. The article provides empirical evidence of why this effect is significant for the American economy, and theoretical arguments indicating that taking the Cantillon effect into account can add certainty to studies of both monetary policy costs and institutional changes caused by rising inequality.

scholarly journals Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data *

2016 ◽  
Vol 131 (2) ◽  
pp. 519-578 ◽  
Author(s):  
Emmanuel Saez ◽  
Gabriel Zucman
Keyword(s):  
United States ◽  
Income Tax ◽  
Wealth Inequality ◽  
The United States ◽  
Balance Sheets ◽  
Distribution Of Wealth ◽  
Consumer Finances ◽  
Wealth Concentration ◽  
Top Incomes ◽  
Tax Returns

Abstract This paper combines income tax returns with macroeconomic household balance sheets to estimate the distribution of wealth in the United States since 1913. We estimate wealth by capitalizing the incomes reported by individual taxpayers, accounting for assets that do not generate taxable income. We successfully test our capitalization method in three micro datasets where we can observe both income and wealth: the Survey of Consumer Finance, linked estate and income tax returns, and foundations’ tax records. We find that wealth concentration was high in the beginning of the twentieth century, fell from 1929 to 1978, and has continuously increased since then. The top 0.1% wealth share has risen from 7% in 1978 to 22% in 2012, a level almost as high as in 1929. Top wealth-holders are younger today than in the 1960s and earn a higher fraction of the economy’s labor income. The bottom 90% wealth share first increased up to the mid-1980s and then steadily declined. The increase in wealth inequality in recent decades is due to the upsurge of top incomes combined with an increase in saving rate inequality. We explain how our findings can be reconciled with Survey of Consumer Finances and estate tax data.

Household Balance Sheets, Consumption, and the Economic Slump*

2013 ◽  
Vol 128 (4) ◽  
pp. 1687-1726 ◽  
Author(s):  
Atif Mian ◽  
Kamalesh Rao ◽  
Amir Sufi
Keyword(s):  
Geographic Distribution ◽  
Risk Sharing ◽  
The United States ◽  
Housing Wealth ◽  
Balance Sheets ◽  
Net Worth ◽  
Distribution Of Wealth ◽  
Marginal Propensity To Consume ◽  
Marginal Propensity

Abstract We investigate the consumption consequences of the 2006–9 housing collapse using the highly unequal geographic distribution of wealth losses across the United States. We estimate a large elasticity of consumption with respect to housing net worth of 0.6 to 0.8, which soundly rejects the hypothesis of full consumption risk-sharing. The average marginal propensity to consume (MPC) out of housing wealth is 5–7 cents with substantial heterogeneity across ZIP codes. ZIP codes with poorer and more levered households have a significantly higher MPC out of housing wealth. In line with the MPC result, ZIP codes experiencing larger wealth losses, particularly those with poorer and more levered households, experience a larger reduction in credit limits, refinancing likelihood, and credit scores. Our findings highlight the role of debt and the geographic distribution of wealth shocks in explaining the large and unequal decline in consumption from 2006 to 2009.

Dual private pension households and the distribution of wealth in the United States

2002 ◽  
Vol 1 (2) ◽  
pp. 131-155 ◽  
Author(s):  
NANCY AMMON JIANAKOPLOS ◽  
VICKIE L. BAJTELSMIT
Keyword(s):  
United States ◽  
Wealth Distribution ◽  
The United States ◽  
Household Wealth ◽  
Private Pension ◽  
Private Pensions ◽  
Net Worth ◽  
Consumer Finances ◽  
Using Data ◽  
The Impact

Using data from the 1998 Survey of Consumer Finances, this paper examines the impact of dual private pension households on the distribution of household wealth in the United States. This paper builds on three lines of previous research: inquiries into ‘assortative mating’, i.e., the tendency for people with similar characteristics to marry; studies emphasizing the importance of pensions as a component of household wealth; and recent research examining how wives' earnings alter the distribution of household income. Evidence of ‘assortative private pensions’, i.e., the tendency for people with private pensions to be married to people with private pensions, is presented. Estimates of the expected value of private pension and social security wealth are added to measures of household non-retirement net worth to obtain the value household wealth. These data indicate that wives' private pensions in dual private pension households contribute marginally to greater equality in the wealth distribution.

scholarly journals Post-crisis developments in young adults’ housing wealth

2021 ◽  
Vol 31 (5) ◽  
pp. 580-596
Author(s):  
Caroline Dewilde ◽  
Lindsay B. Flynn
Keyword(s):  
Young Adults ◽  
Housing Market ◽  
Wealth Inequality ◽  
The United States ◽  
Capital Gains ◽  
Housing Wealth ◽  
Inequality Measures ◽  
Consumer Finances ◽  
Profile Changes ◽  
Gains And Losses

How has housing wealth inequality changed for young-adult households in the post-financial crisis period, and what is driving such change? We chart a path for subsequent studies by analysing the previously unexamined post-crisis housing wealth profile of young adults via different angles and using multiple inequality measures. Using household micro-data for 11 European countries ( Household Finance and Consumption Survey, 2010–2017) and the United States ( Survey of Consumer Finances, 2010–2016), we find that the accumulation of housing assets for 22–44 year olds is unevenly concentrated among high-income homeowners, over and above what would be expected given the well-known decline in homeownership. We describe and assess several potential drivers for these wealth profile changes, finding that the current explanations offered in the literature do not adequately account for the unequal wealth profile of young people. We conclude that a mix of dynamics, including housing market volatility, housing market configurations leading to uneven capital gains and losses, and the increased social selectivity of homeownership intersect to shape the ways that young adults navigate the housing market in post-crisis times.

Damages Done: The Longitudinal Impacts of Natural Hazards on Wealth Inequality in the United States

2018 ◽  
Vol 66 (3) ◽  
pp. 448-467 ◽  
Author(s):  
Junia Howell ◽  
James R Elliott
Keyword(s):  
United States ◽  
Natural Hazards ◽  
Large Scale ◽  
Natural Hazard ◽  
Panel Study ◽  
Wealth Inequality ◽  
The United States ◽  
Income Dynamics ◽  
Nationally Representative ◽  
Research And Policy

Abstract This study investigates a largely ignored contributor to wealth inequality in the United States: damages from natural hazards, which are expected to increase substantially in coming years. Instead of targeting a specific large-scale disaster and assessing how different subpopulations recover, we begin with a nationally representative sample of respondents from the restricted, geocoded Panel Study of Income Dynamics. We follow them through time (1999–2013) as hazard damages of varying scales accrue in the counties where they live. This design synthesizes the longitudinal, population-centered approach common in stratification research with a broad hazard-centered focus that extends beyond disasters to integrate ongoing environmental dynamics more centrally into the production of social inequality. Results indicate that as local hazard damages increase, so does wealth inequality, especially along lines of race, education, and homeownership. At any given level of local damage, the more aid an area receives from the Federal Emergency Management Agency, the more this inequality grows. These findings suggest that two defining social problems of our day – wealth inequality and rising natural hazard damages – are dynamically linked, requiring new lines of research and policy making in the future.

A Kaleckian wealth tax to support a Green New Deal

2021 ◽  
Vol 32 (2) ◽  
pp. 190-208
Author(s):  
Susan Schroeder
Keyword(s):  
New Deal ◽  
Sovereign Debt ◽  
Wealth Inequality ◽  
Well Being ◽  
The United States ◽  
National Debt ◽  
Jel Codes ◽  
Net Worth ◽  
Wealth Tax ◽  
Negative Impacts

Green New Deals are being widely discussed as both a means to confront climate change and to improve aspects of social well-being. An important facet of the discussion is how they should be financed. The negative impacts of Covid-19 on national budgets and sovereign debt question whether the implementation of Green New Deals is feasible if austerity needs to be introduced to achieve sustainability. This article assesses whether a wealth tax based upon the work of Michal Kalecki could help avoid austerity measures and facilitate the introduction of Green New Deals. While wealth taxes have traditionally been defined on net worth or assets to reduce wealth inequality, the formulation is meant to be equitable by applying to gross wealth or assets. Estimates are calculated for the United States and turn out to be quite modest. The approach not only generates revenue to cover expected net interest outlays on national debt, but additional revenue to pay down portions of it and/or support green initiatives, such as Biden’s de-carbonisation policy. The article concludes with a discussion of challenges for the tax’s effectiveness. JEL Codes: H2, H3, B2, B3

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