Mardi 9 mai 2023

Le 9 mai 2023

Le prochain séminaire du GAINS a lieu le 9 mai 2023 de 10h30 à 12h00. 

Eustache ELINA (Paris School of Economics) présentera un papier intitulé From Labor Income to Wealth Inequality in the US : General Equilibrium Matters co-écrit avec Raphaël HULEUX (Copenhagen Business School).

Abstract: The past 40 years have been characterized by a decrease in the interest rate, an increase in the price of equity shares, relatively low growth rates, and an increase in income and wealth inequality. Using a heterogeneous-agent model featuring permanent labor income inequality, capital gains, and non-homothetic preferences, we investigate the impact of an increase in permanent labor income inequality on wealth inequality. In the long run, an increase in permanent labor income inequality increases aggregate savings which drives down the real interest rate pushing the bottom of the distribution to save less but limiting financial incomes at the top. However, in the short run, this decrease in the interest rate is more than compensated by capital gains, increasing the wealth share at the top of the distribution. This change in prices accounts for at least 8% of the increase in wealth inequality. Those insights shed new light on the equity premium puzzle, secular stagnation, and the increase in wealth inequality.