Wealth Inequality in the United States since 1913

Wealth Inequality in the United States since 1913

Emmanuel Saez (UC Berkeley) Gabriel Zucman (LSE)

October 2014

Introduction

US Income inequality has increased sharply since the 1970s Mixed existing evidence on wealth inequality changes Is inequality increase driven solely by labor income? We capitalize income tax return data to estimate new annual series of US wealth concentration since 1913 Key result: Wealth inequality has surged but phenomenon is concentrated mostly within the top .1% (=wealth above $20m)

% of total household wealth

U-Shaped Wealth Concentration

Top 0.1% wealth share in the United States, 1913-2012

25% 20% 15% 10%

5% 0%

This figure depicts the share of total household wealth held by the 0.1% richest families, as estimated by capitalizing income tax returns. In 2012, the top 0.1% includes about 160,000 families with net wealth above $20.6 million. Source: Appendix Table B1.

1913 1918 1923 1928 1933 1938 1943 1948 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008 2013

Surge in top wealth shares concentrated in top 0.1%

% of total household wealth

Top wealth shares: decomposing the top 1%

14%

12% Top 0.5%-0.1%

10%

8%

6% Top 0.1%-0.01%

4%

2%

Top 0.01%

Top 1%-0.5%

0% 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Outline of the talk

I.The capitalization method II. The distribution of wealth III. Robustness and comparison with existing estimates IV. Decomposing wealth accumulation: income and saving rates

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