Wealth Inequality Research Articles

The Impact of Family Wealth on Asset Return: A Moderated Chain Median Model Partially Explaining Wealth Inequality

Global wealth is distributed highly unequally, and this issue has worsened in recent years. Such inequality threatens human well-being and fundamental values. In response, this paper aims to explore the wealth inequality phenomenon from the perspective of investment psychology. Recognizing wealth return heterogeneity as a crucial source of inequality, the paper establishes a psychological model focused on two investment skill factors that can partially explain this heterogeneity. The theoretical foundation of this model includes the conservation of resources (COR) theory, prospect theory, and performance determinants theory. In our model, risk preference and asset-holding periods sequentially mediate the relationship between family wealth and asset returns. Moreover, risk preference and the disposition effect are identified as serial mediators in this relationship. Financial literacy also moderates the relationship between the risk preference, asset-holding period, and disposition effect. This proposed model not only provides a richer explanation for wealth return heterogeneity through the lens of investment skill but also extends the application of COR theory to investment psychology, thereby enhancing our understanding of resources. Moreover, it offers a novel explanation for the relationship between risk preference and the deposition effect, enriching prospect theory. Finally, the inclusion of financial literacy’s role broadens the scope of performance determinants theory.

The Distribution of Land in Luxembourg (1766–1872): Family-Level Wealth Persistence in the Midst of Institutional Change

The paper analyzes family-level wealth inequality and social mobility in Dudelange (Luxembourg) over five generations between 1766 and 1872, a period that saw the end of feudal social relations. While the integration of Luxembourg into the French revolutionary regime produced a reduction in the Gini coefficient for the ownership of land, the social mobility analysis reveals a relative stability of family positions within the land-wealth distribution throughout the period. This shows that family-level transmission mechanisms limit social mobility and strongly advantage those with ancestors owning property wealth, even when there are significant changes in the organization of property relations.

Raising Children, Rising Debt: Mortgage Debt Among American Families

American households owe more than $12 trillion in mortgages, which represents the main source of a family’s debt. Scholars connect mortgages to the desire of families, especially better-off households, to seek housing in neighborhoods with good schools for their children, which tend to be more expensive. Although this perspective assumes a children–mortgage link, we do not know whether having children actually increases mortgage, nor whether and how this relationship varies by household income. To examine these issues, we use eleven waves of the Panel Study of Income Dynamics data between 1997 and 2017 and individual fixed effects, as well as propensity score matching and a quasi-experimental design. Our analyses show that generally, (1) families with children are more likely to have mortgage debt and in greater amounts; (2) it is families in the 60th to 100th income percentile who have the most mortgage debt; and (3) critically, families in the roughly 10th to 60th income percentile have more mortgage debt due to having children. These findings defy assumptions that it is well-to-do families that take on more mortgage debt as part of intensive or concerted cultivation parenting practices. Rather, our findings suggest that families who take on mortgage debt related to their children tend to be those in more economically precarious positions for whom debt for the sake of kids may be a financial burden. As such, our findings provide suggestive evidence that financially intensive parenting may contribute to growing wealth inequality among American families with children.

Does employee ownership promote workers’ wealth accumulation? the case of stock options

ABSTRACT This study examines the consequences of employee ownership for workers’ economic outcomes, with a focus on wealth accumulation. Using large-scale, nationally representative data from the US Survey of Consumer Finances, this study focuses on stock options as a pathway into employee ownership and examines the association between stock options and wealth. A difference-in-differences analysis shows that employees with stock options accumulate greater wealth than employees who do not receive stock options, and the differences are larger at longer tenure. The differences remain statistically significant after accounting for a wide range of job characteristics and sociodemographic attributes. Furthermore, the wealth gap between employees with and without stock compensation widened over time. Finally, results show that stock options are more prevalent among already more socioeconomically advantaged employees. Together, these findings suggest that broadening employee ownership – through stock options or similar avenues – might help in addressing increasing wealth inequality in the United States by giving workers, especially middle- and lower-income workers, a stake in US economic growth.

Financial Technology, wealth Threshold, and Wealth Inequality in China

This study developed a theoretical model to examine the impact of financial technology (fintech) on wealth inequality from a wealth threshold perspective. The model's numerical simulation results suggest that fintech exerted an inverted U-shaped impact on wealth inequality. Empirical test results based on China Household Finance Survey panel data and fintech index data confirmed this finding. The impact varied across regions and among groups with differing education levels and financial literacy.

Intergenerational transfers, differential fertility, and wealth inequality

Abstract Rising income and wealth inequality across the developed world has prompted a renewed focus on the mechanisms driving inequality. This paper contributes to the existing literature by studying the impact from life-cycle savings, intergenerational transfers, and fertility differences between the rich and the poor on the wealth distribution. We find that bequests increase the level of wealth inequality and that fertility differences between the rich and the poor amplify this relationship. The counterfactual exercises show that the interaction between bequests and differential fertility is quantitatively important for understanding wealth inequality in the United States.

Impact of Uncertainty Shocks on Income and Wealth Inequality

AbstractWe analyze the distributional consequences of uncertainty shocks in the U.S. economy. While their impact on income inequality appears marginal when measured by a single statistic, there are important variations: inequality between the rich and middle‐income groups decreases, while inequality between the middle and poor‐income groups increases significantly. Additionally, uncertainty shocks increase labor income inequality through higher unemployment rates but simultaneously decrease nonlabor income inequality by reducing business and interest income. Uncertainty shocks reduce disposable income inequality, demonstrating the role of redistribution policy. Finally, they tend to reduce wealth inequality, mainly due to their adverse impact on financial asset prices, predominantly owned by wealthy households.

Media Review: The Gender of Capital: How Families Perpetuate Wealth Inequality

Media Review: The Gender of Capital: How Families Perpetuate Wealth Inequality

Moving money to support social justice movements: A spiritual practice.

Wealth inequality is rising, and millennials will be the future recipients of the largest intergenerational wealth transfer. Meanwhile, there is a need to move more money to support transformative social justice movements. This study examines the impact of spirituality as a motivator for the social justice movement giving among progressive young adult activists with wealth and class privilege, organizing toward the equitable redistribution of wealth, land, and power. Using survey data (n = 560), regressions and mediation models suggest that spiritual motivation was a significant positive predictor of how much participants monetarily gave to social justice movements. While religion did not significantly predict movement giving, indirect effects models showed that spirituality positively mediated the effect of being raised with any religion on movement giving compared to those indicating no religion. Implications are explored for how transformative organizing models draw upon secular spiritual practices in their pursuit of individual and collective change.

Markups and Inequality

Abstract We characterize optimal product market policy in an unequal economy in which firm ownership is concentrated and markups increase with firm market shares. We study the problem of a utilitarian regulator who designs revenue-neutral interventions in the product market. We show that optimal policy increases product market concentration. This is because policies that encourage larger producers to expand improve allocative efficiency, increase the demand for labor and equilibrium wages. We derive these results both in a static Mirrleesian setting in which we impose no constraints on the shape of interventions, as well as in a dynamic economy with wealth accumulation. In our dynamic economy optimal policy reduces wealth and income inequality by redistributing market share and profits from medium-sized businesses, which are primarily owned by relatively rich entrepreneurs, to larger diversified corporate firms.

Do higher public and private debt levels benefit the wealthy? An empirical analysis of top wealth shares in the UK

Purpose Despite the concomitant rise in recent decades in both debt levels (public as well as private) and wealth inequality, empirical evidence on the relationship is absent in existing literature. This is striking especially since recent theoretical contributions point to a link between debt and wealth inequality. We contribute to the debate by investigating empirically whether higher levels of UK public and household debt increase the UK wealth concentration at the top 1 and 10% of the wealth distribution.Design/methodology/approach We employ the Autoregressive Distributed Lag (ARDL) cointegration approach with UK time series data from 1970 to 2019. For robustness, a further analysis using panel data fixed effects estimation on a cross-country sample that also includes France and the USA is undertaken. We also use bootstrapping to conservatively estimate statistical significance.Findings Higher levels of public and household debt are found to increase wealth concentration at the top 1 and 10%. The effect is stronger for household debt. Fixed effects estimation on a cross-country dataset supports the results for the UK.Originality/valueThis study is the first to investigate empirically whether rising levels of UK public and household debt benefit the wealthy and thus widen the gap between the “haves” and “have-nots”.

The distribution of privately held business assets in the United States

Although privately held businesses are central to the economy and society, little is known about how their assets are distributed among the population. To better understand rising and persistent wealth inequalities, this paper describes the household distribution of private business assets in the United States and examines how it has changed over time. Using data from the 1989–2019 Survey of Consumer Finances, we show that the relative number of business owners has remained stagnant at low levels and that assets in privately held firms have become increasingly concentrated. In 2019, the top 1 % of households controlled nearly 80 % of the equity in private businesses, up from about 70 % in the late 1980s. Moreover, we find that these trends appear to be quite general and do not merely reflect dynamics among elites or in specific sectors of the economy. We discuss implications for the organization of the US economy, wealth inequality, and public policy.

Wealth inequality and community vitality in the aftermath of the Australian “Black Summer” bushfires

AbstractThis study investigates the adverse impact of community‐level wealth inequality in the aftermath of a natural disaster, and explores the role of community strength (i.e., community identification, cohesion, and identity continuity) in potentially mitigating these negative effects. Using geo‐targeted survey data from communities affected by the 2019/2020 Black Summer Bushfires in Australia (N = 363), we found that greater perceived wealth inequality was associated with lower confidence that the community would make necessary changes to meet the threat of future bushfires, lower collective efficacy regarding future bushfires, and lower anticipated quality of life. However, we also found evidence some of these adverse effects were attenuated among those who reported higher levels of community identification and community cohesion. This study illustrates that problems posed by wealth inequality extend to the context of disaster recovery and climate change adaptation, and further underscores the socially mediated nature of this threat by demonstrating the potential for community strength to play a buffering role.

Does increasing robot density exacerbate wealth inequality?

This article expands the economic consequences of applying automation technology beyond the labor market to encompass wealth distribution. It empirically investigates the effects of changes in robot density on household wealth inequality and potential mechanisms. By using three-digit industry codes provided by the China Census 1 % sampling data in 2015, this paper achieves a more accurate matching of industrial robot data with individual data and employs instrumental variables to alleviate potential endogeneity bias. This paper finds that increasing robot density exacerbates the inequality of family wealth, and this effect has a particularly significant impact on young labor force and workers with low education. Its impact mechanism may come from the inequality of employment difficulty and the increase of the non-transferability of human capital. This study is of great importance to deeper understand the economic consequences of the accelerated use of automation technology and accurately formulate public policies to narrow the wealth gap.

The Dynamics of Disparity: A Comprehensive Analysis of the Causes and Consequences of Income and Wealth Inequality and Policy Interventions for Mitigation

In today's global economy, economic disparities remain a pressing issue, persisting across different societies. This paper explores the causes, impacts, and potential policy interventions to address income and wealth inequality. The analysis draws on insights from prominent economists such as Darren Acemoglu, James A. Robinson, Joseph E. Stiglitz, Branko Milanovic, Thomas Piketty, and Emanuel Saez. According to the study, globalization, automation, and labor market dynamics are key economic factors driving inequality. In addition, political and social factors, including tax policies, governance models, and access to education and healthcare, significantly impact economic distribution. The consequences of inequality are multifaceted, affecting economic growth, social mobility, social health, and political stability. Furthermore, this paper discusses various policy interventions, such as progressive taxation, improved access to quality education and healthcare, and more robust social safety nets, as potential solutions to mitigate the adverse effects of economic disparities and promote a more equitable distribution of wealth.

The failed promise of freedom—Emancipation and wealth inequality in the Caribbean

The failed promise of freedom—Emancipation and wealth inequality in the Caribbean

Emotion regulation as affective neoliberal governmentality.

Emotion regulation is central in many therapy models, including couple and family therapy models. This article draws on poststructuralist governmentality studies and processual affect theory to offer insight into how the therapeutic concept of emotion regulation may reflect and support neoliberal affective forms of self-governance. We suggest that couple and family therapy-through using professional discourses and affect-oriented techniques or interventions-may be another site wherein neoliberal governmentality is implemented and extended in contemporary westernized neoliberalized societies. In facilitating emotion regulation, we argue that there is a risk that therapists may implicitly promote a neoliberal worldview that encourages clients to mobilize neoliberal techniques to become self-improving, entrepreneurial subjects, responsible for their happiness and well-being. Conditions of precarity associated with individualist, neoliberal capitalist ideologies and policies (e.g., unemployment, job insecurity, forced migration, wealth inequalities, mass incarceration, social isolation) generate emotional burdens for people to manage that professional techniques or interventions may normalize as clients' self-management tasks. We theorize emotion regulation as an affective governmentality tactic of power and suggest that couple and family therapy can offer points of resistance to individualization and responsibilization and opportunities for creating or affirming alternative subjectivities and affectivities.

The erosion of democracy in an age of wealth inequality: Unravelling the impact of subjective socioeconomic stratification

Since the 1980s, the growing wealth disparity in advanced capitalist societies has drawn attention from political economy scholars due to its profound effects on political systems. This research explores the relationship between wealth inequality and the stability of democratic institutions, focusing on how subjective class perceptions shape support for democratic governance. The findings indicate that as wealth inequality intensifies, it significantly reshapes class identities, influencing attitudes towards democracy. Both the subjective lower and upper classes exhibit diminished support for democratic systems, albeit for different reasons, which may pose risks to democratic stability. In contrast, the subjective middle class, a stronghold of democratic values, is shrinking in both proportion and influence as wealth inequality widens, potentially weakening democratic institutions further. This study underscores the connection between increasing wealth inequality and challenges to democratic values, highlighting the importance of policy measures to protect democratic integrity in the face of rising economic disparities.

URGENSI PERJANJIAN PRANIKAH SEBAGAI KESEPAKATAN AWAL SUATU PERKAWINAN DAN AKIBAT HUKUM BAGI AHLI WARIS

Abstract A marriage agreement (prenup) is a form of agreement made between one party and another party before holding a wedding ceremony to validate the two as husband and wife. Household issues related to property are closely related to marriage agreements (pre-nuptials). The existence of a marriage agreement (pre-nup) is intended to avoid wealth inequality in household relationships. The aim of this research is to study, analyze and provide a general view to the public regarding marriage (pre-nup) agreements. The research method used is qualitative research through a case study approach using legislation as regulations and also processing data through cases that have occurred as research references. The function and benefits of marriage agreements (pre-nuptials) as a guideline that regulates the rights and obligations of husband and wife regarding the future of the family, whether regarding children's education, business, etc. residence, etc. as long as it does not conflict with law and morality. Protect family members from the threat of domestic violence.

Connected Food: First Steps for an Ambitious National Food Strategy

Background: The global food system faces growing pressure from population growth, climate change, wealth inequity, geo-political instability, and damage to the ecosystems on which our food supply depends. Fragmentation of the priorities and needs of food system stakeholders—citizens, food producers, food industries, governments—compounds the problem, with competing or misaligned interests increasing the risk of failure to adequately meet the needs of those that form, and are served, by the food system. Growing consensus on the need for transformative system level change to address the problems facing the food system is yet to be significantly reflected in strategic action. Methods: The national food strategy of the UK is offered as an exemplar to discuss the need to promote more coherent and ambitious visions of transformative change that acknowledge the complexity of the food system as a whole. We draw upon cross-sectoral experience to distil the needs, priorities, and key food system tensions that must be acknowledged to promote transformative systems change that equitably delivers healthy sustainable diets, contributes to a resilient global food system, and protects the environment. Results: Greater coherence, ambition, and consideration of the food system as a whole are needed if a UK national food strategy is to contribute to significant transformative change. Conclusions: To promote this, we advocate for (1) a food system digital twin to model and test potential food system interventions or legislation; (2) a citizens’ forum to inform and co-develop a cohesive national food strategy; and (3) increased cohesion and integration of food system governance within government to drive a coherent, ambitious national food strategy.