"Income and wealth inequality has widened significantly in many developed countries during the past 40 years, particularly in the Anglo-Saxon world. In some countries, e.g. the US, income concentration is now higher than in the early decades of the 20th century. EU trends are less strong, but push in the same direction. Yet, despite these puzzling facts, we still know very little about the forces behind the long run evolution of income and wealth distribution. The central objective of this proposal is to better understand the rise in inequality, and more generally to develop a unified empirical and theoretical approach to the distribution and redistribution of income and wealth.
First, I propose to construct a new ""World Wealth and Income Database"" (WWID) that will be made public through a dedicated website. Existing inequality data sets are insufficient, first because many countries are not well covered, and mostly because available series concentrate on income inequality and usually do not cover wealth inequality. This is unfortunate, because the theoretical forces at play are very different for income and wealth distributions. The WWID will remedy both deficiencies and allow for a better articulation between available data and theoretical models.
Next, I will use this new database to test for the various mechanisms explaining the rise in inequality. In particular, I will explore the extent to which low growth and high returns to wealth naturally push towards higher wealth-income ratios as well as rising wealth concentration. In the near future this mechanism is likely to be particularly strong in low growth Europe (especially in countries with negative population growth). In the long run it can also operate at the level of the global distribution of wealth. I will also develop new theoretical models of optimal taxation of income and wealth. These models will be using a ""sufficient statistics"" approach and will be calibrated using WWID data."
Call for proposal
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