Economics, Econometrics and Finance
4 years ago

Born Lucky or Not: How Initial Wealth Shapes American Inequality

SSRN Electronic Journal
Life Cycle Models, Heterogeneity of Initial Assets, and Wealth Inequality
Pedro Cavalcanti Ferreira, Diego B. P. Gomes

Paper Summary

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Life cycle models with different starting assets can better explain wealth inequality in the US. By considering that some people are born into wealth while others start with little or no assets, the models can match real-world data. This shows that initial wealth differences play a crucial role in shaping wealth inequality.