Should-Read: Jess Benhabib, Alberto Bisin, and Mi Luo: Wealth distribution and social mobility in the US: A quantitative approach

Should-Read: Jess Benhabib, Alberto Bisin, and Mi Luo: Wealth distribution and social mobility in the US: A quantitative approach: “We concentrate on… i) skewed and persistent distribution of earnings…

…ii) differential saving and bequest rates across wealth levels, and iii) stochastic idiosyncratic returns to wealth (capital income risk), possibly differential across wealth levels. All of these factors are fundamental for matching both distribution and mobility, each with a distinct role in inducing wealth accumulation near the borrowing constraints, contributing to the thick top tail of wealth, and affecting upward and/or downward social mobility. The stochastic process for capital income risk which best fits the cross-sectional distribution of wealth and social mobility in the U.S. shares several statistical properties with those of the returns to wealth uncovered by Fagereng et al. (2017) from tax records in Norway…