Empirical studies on many social issues show that numerous statistical distributions follow power laws, such as stock-price fluctuations, the probability distribution of the population of cities, the degree distributions in many networks and distribution of income or wealth. In particular, the wealth distribution which is an old topic has recently been renewed by a small band of econophysicists...

This paper considers the macroeconomic implications of a set of empirical studies finding a high degree of dispersion in preference heterogeneity. It develops a model with both uninsurable idiosyncratic income risk and risk aversion heterogeneity to quantify their effects on wealth inequality. The results show that with the available estimates of the risk aversion distribution from PSID data th...

Research on poverty and inequality is dominated by cross-section studies that are useful but disguise change over time. Investigation of change requires longitudinal data, which are relatively rare and expensive. This paper researches wealth mobility in a national sample of 4,255 households monitored in the National Longitudinal Surveys of Older Men and of Mature Women from the mid-1960s to the...

A large body of survey research offers evidence that citizens are not always fully aware of the economic and political realities in their respective countries. Norton and Ariely (2011) extended this research to the domain of wealth inequality, showing that Americans were surprisingly unaware of the shape of the wealth distribution in America. Using an alternative methodology, Eriksson and Simps...

This paper investigates the relationship between wealth and entrepreneurship of middleand older-age individuals in the United States, a group whose wealth holdings and rates of selfemployment are substantially higher than those of younger individuals. Using longitudinal data from the Health and Retirement Study that span over 14 years, we find entry into selfemployment increases with total weal...

Consumption is commonly used as a proxy for permanent income. We go a step further by establishing the link between the distribution of consumption and that of permanent income in terms of dominance orderings. We introduce two new dominance orderings, the Generalized Top Lorenz test and the related affluence ordering. If consumption is a concave function of permanent income, we get an indirect ...

We explore the link between wealth inequality and business cycle fluctuations in a two-sector neoclassical growth model with endogenous labor and heterogeneous agents. Assuming that wealth inequality is described by the distribution of shares of capital, we show that in the most plausible situations wealth equality is a stabilizing factor. In particular, when wealth is Pareto distributed and pr...

We study the wealth distribution in Bewley economies with idiosyncratic capital income risk. We show analytically that under rather general conditions on the stochastic structure of the economy, a unique ergodic distribution of wealth displays a fat tail. © 2015 Elsevier Inc. All rights reserved. JEL classification: E13; E21; E24

In simulations of some economic gas-like models, the asymptotic regime shows an exponential wealth distribution, independently of the initial wealth distribution given to the system. The appearance of this statistical equilibrium for this type of gas-like models is explained in a rigorous analytical way.

This paper deals with the scaling property observed in the accumulated wealth distribution known as Pareto’s law in a model of artificial market. Assuming a simple model of independent agents playing minority game, we discuss the condition for the wealth distribution to satisfy the scaling property having Pareto’s index in the range of empirical value.