A Micro Perspective on r > g
Peer reviewed, Journal article
Published version
Permanent lenke
https://hdl.handle.net/11250/3057973Utgivelsesdato
2023Metadata
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Originalversjon
10.1111/ecca.12464Sammendrag
By exploiting large-scale administrative data on income and estimated personal wealth in Norway from 2010 to 2018, this paper establishes the first micro-level analysis of the difference between the real return on wealth and the real growth rate of total pre-tax income, across the entire net wealth distribution. We show that for the top 40% of the distribution, the aggregate of 1.8% underestimates its micro counterpart , while the opposite happens for the bottom 60%. Moreover, for the bottom 50% of the net wealth distribution, it is indeed the case that . In addition, we run a simulation exercise demonstrating that the full distribution of —which has been shown to be positively associated with the position in the net wealth distribution—delivers a higher predictive power for the study of wealth inequality than simply focusing on the aggregate . All results are robust to the exclusion of imputed rents from the income definition.