Wealth Ownership Research Articles

Endogenous hours and the wealth of entrepreneurs

US entrepreneurs typically work long hours in their firms and these hours form a large part of the firms' labor input. This paper studies the role of endogenous owner hours in shaping the wealth distribution among entrepreneurs. We introduce owners' endogenous labor supply into a model of entrepreneurial choice and financial frictions. The model fits well the levels and the dispersion of wealth among entrepreneurs. Long owner hours incentivize poor, highly productive individuals to be owners and help the most productive owners to accumulate large quantities of wealth. On net, owners working long hours decreases the median owner wealth and increase wealth dispersion among owners. Differently, the ability to work sufficiently short hours incentivizes owners to run low productivity firms with high wealth to income ratios. Finally, alternative calibrations ignoring the endogenous labor supply of owners lead to owners that are much richer than in the data and overstate the effect of financial frictions in the economy.

COMMUNITY PERCEPTION OF OIL RESOURCE OWNERSHIP AND CLIMATE CHANGE DYNAMICS IN THE NIGER DELTA

The objective of this paper was to investigate and document perception of locals on oil wealth ownership and artisanal refining and their implications on climate change. In addition, the paper explored the local understanding of climate change and willingness for mitigation and adaption in relation to ownership differences between communities and the state. Relying on a single case method triangulated with secondary sources, the research focused on Igbomotoru community in Southern Ijaw Local Government Area of Bayelsa state, through direct observation and surveys. This was analysed with the aid of simple percentage and the Nvivo qualitative method of data analysis. The findings showed that community perception of resource ownership undermines climate change mitigation and adaptation efforts

Wegbreit: a cautionary tale for trustees, lawyers and wealth owners

Abstract On 8 July 2019, the US Tax Court held that a grantor trust holding offshore life insurance constituted a sham. A review of the facts of the case and the court’s opinion offer a cautionary tale to those planning, maintaining, or benefitting from similar wealth-holding structures. Like most cautionary tales, this one blends a unique factual milieu with tragic decision-making. But, unlike most cautionary tales, this one helps to illustrate some fundamental tax and wealth structure planning points.

A Consensus on Taxing the Rich? Comparing Mainstream Economics, Piketty and Post-Keynesian Economics

Over several decades, income has become increasingly concentrated at the top of the distributional pyramid in many rich countries. Raising taxes on top income earners and top wealth owners has gained traction in many policy circles as a way to reverse this inequality surge. This paper examines the views of mainstream economists, Thomas Piketty and Post-Keynesian economists concerning the impact of taxation and optimal tax policy. We show that, in terms of taxing the rich, these three perspectives have a great deal in common, but there are also many disagreements. We argue that Piketty occupies a middle ground between mainstream and Post-Keynesian economics, and there is a good deal that Piketty and these two schools can learn from one another.

The Impact of Financial Leverage on the Performance of Commercial Banks: Evidence from Selected Commercial Banks in Ethiopia

The financing decision function of corporate finance deals with determining the best financing mix or capital structure of the firm in order to maximize the value of firm or wealth of owners. In Ethiopia, Commercial Banks use a combination of debt and equity source of finance in their capital structure. Each source of finance has its own cost of capital in the capital structure and hence effect on value of corporation. The ratio used to measure the proportion of debt to equity is considered as Financial Leverage. The main objective of this study is to investigate the effect of financial leverage on the financial performance of Ethiopian Commercial Banks for the period of 10 years (2008-2017) for the 5 selected commercial banks. As a measure of financial leverage for the independent variables three variables such as Debt ratio (DR), Debt Equity ratio (DER) and Interest coverage ratio (ICR) (times interest earned ratio) were used. As a measure of financial performance, the dependent variable two ratios such as return on asset (ROA) and return on equity (ROE) were used. The ex-post facto and longitudinal research design were used. The secondary data were collected from the audited financial reports (profit and loss statement and statement of financial position) of selected commercial banks operated in Ethiopian financial system. Descriptive statistics and Fixed Effect model were used. The result of the study showed that, Debt Ratio (DR) has a negative insignificant effect on Banks’ performance measured by Return on Assets (ROA) and Return on Equity (ROE) while Debt Equity Ratio (DER) And Interest Coverage Ratio (ICR) have significant positive Effect on Banks’ performance measured by Return on Assets (ROA) and Return on Equity (ROE).

Cooperative Compliance Program for Individuals and Trusts: A Proposal for a Compliance Passport

Ensuring tax compliance among business and wealth owners is an important policy goal for many tax authorities. This article develops a proposal for a voluntary program for individuals, family trusts and private investment vehicles which draws upon existing cooperative compliance programs for large corporations, such as the OECD’s International Compliance Assurance Programme (ICAP). Under the proposed program, the authorities of the relevant jurisdictions would determine, on a joint basis, whether the participant is in full compliance with their tax obligations and whether there are any money laundering concerns. The implementation of this proposal could enhance a culture of cooperative compliance and free up enforcement resources. For participants, it could improve privacy, increase certainty, and reduce compliance costs and distortions. As this proposal has the potential to ensure compliance while reducing costs and risks for both tax authorities and taxpayers, it deserves serious consideration.

Entrepreneurial Wealth and Employment: Tracing Out the Effects of a Stock Market Crash

I provide evidence that adverse shocks to the wealth of business owners during the Financial Crisis had large effects on their firms' financing, employment, and investment. I use individual-level portfolio data from Norway to exploit the dispersion in stock returns during 2008–09 as a source of exogenous variation in entrepreneurs' wealth. I then trace out the effects of these shocks to the entrepreneurs' privately-held firms. I find that the adverse employment and investment effects are primarily driven by young firms who—relative to mature firms—obtain considerably less bank financing following an owner wealth shock. Firms adjust employment primarily through hiring less, rather than firing, consistent with firms providing extensive-margin insurance for existing workers. These findings provide a causal link between asset price shocks and the real economy; and document that equity-financing frictions and the procyclicality of entrepreneurial wealth are important channels through which economic shocks amplify.

Varieties of Affluence: How Political Attitudes of the Rich Are Shaped by Income or Wealth

AbstractSociological research often uses income as the only indicator to describe or proxy the group of the rich. This article develops an alternative framework in order to describe varieties of affluence as three-dimensional: depending on income, wealth, and origin of wealth. The relevance of such a multidimensional perspective for social outcomes is demonstrated by analysing the heterogeneity in political attitudes between different varieties of affluence. For this purpose, ordinary least squares regressions are applied to a sample from 2005, 2009, and 2014 German Socio-Economic Panel (GSOEP). The main results are, first, that the perspective of varieties of affluence reveals significant differences in social outcomes as demonstrated by political attitudes. Especially wealth possession is related to significantly more right political attitudes. Second, there is strong explorative evidence that the rich in Germany should be regarded as a heterogeneous group. These findings are robust to influential data, multiple imputations of wealth data, and endogeneity due to pooled data. The article concludes, among other things, that more data are required to make more certain assertions.

Book Review: Giacomo Corneo. Is Capitalism Obsolete? A Journey through Alternative Economic Systems (translated by Daniel Steuer)

Giacomo Corneo is a professor of Social Policy and Public Finance at the Free University of Berlin, Germany. He starts his analysis by arguing that capitalism is increasingly becoming unpopular in Europe due to its being wasteful as demonstrated in widespread unemployment, injustice and alienation. He points out that high level of inequality in wealth possession is a real threat to both shared prosperity and democracy in Western Europe. His main problem is how to make the world a better place where people share wealth and prosperity. This ideal world could be achieved through adoption of an alternative economic system that would eliminate the basic contradiction found within capitalism, namely that between the social nature of production and the private mode of appropriation of wealth. Alhough capitalism applies advanced science and technology in creating more wealth, its ironic nature is such that a few people enjoy power, wealth and privileges over the poor who are the majority. This creates a polarized society based on appropriation of wealth- the rich on one end and the poor on the other. Corneo engages us in a debate to find out an alternative economic system that will do away with these imbalances in the appropriation and distribution of wealth. Currently, wealth, power and privileges are concentrated on few capitalists with powers to make decisions affecting billions of people in this world. Capitalist principles, laws and institutions promote and protect the right to private property and power.

Inequality of Wealth Ownership and the Problem of Perpetuities Repeal: A Review of Eric Kades, of Piketty and Perpetuities: Dynastic Wealth in the Twenty-First Century (and Beyond), 60 B.C.L. Rev. 145 (2019)

This is a short review of Eric Kades, Of Piketty and Perpetuities: Dynastic Wealth in the Twenty-First Century (and Beyond) 60 B.C.L. 145 (2019).

Моногорода и освоение сырьевых ресурсов на стадии высокой степени зрелости ресурсной базы

The paper considers the problems of the development of monotowns related to the development of mineral resources. The author shows that the solution of the problems of these cities is possible only if the system of state regulation of the development of mineral resources is changed at the stage of high maturity of the resource base. At the same time, the paper focuses on the development of the so-called "resource monotowns". The author analyzes the relationship between the stages of development and extraction of natural resources within the framework of the research. The important factor is the role of so-called "system specificity" of assets that form the basis for the formation and functioning of the mono-industry and the infrastructure of the settlement. Another important factor is the need for decentralization of powers in granting, taxing, and regulating the development of natural resources, their redistribution from the Federation to regional authorities and municipalities (including monotowns). The latter implies the formation of a system of subsoil use, based on complicity, co-management of the natural resource potential. In this case, in the opinion of the author and the proposed recommendations have constitutional grounds, as Art. 72 of the Constitution of the Russian Federation refers to "joint jurisdiction of the Russian Federation and the subjects of the Federation of issues of ownership, use and disposal of land, mineral wealth, water and other natural resources". The proposed recommendations and practical interpretations for Art. 72 include the need to expand the range of subjects of joint jurisdiction with mandatory inclusion in their number of municipalities (including monotowns), as well as citizens. This involves creating a mechanism for interaction between all these actors in the processes of preparing, discussing and implementing decisions in the sphere of the use of natural resources.

Da Libra ao Real

A proposta deste texto é estudar a formação do sistema monetário em Portugal, entre 1185 e 1580, no processo de sua contínua transformação e manipulação. Atividade de incessante engenharia e fabricação da moeda, a criação de um sistema monetário está diretamente articulada com a própria emergência do poder exclusivo, do seu monopólio pelos interesses cristalizados em um centro do poder, isto é, a monarquia. Neste sentido, o fio narrativo deste artigo será a produção deste sistema hierárquico e consistente de símbolos de conta, instrumentos de troca e de pagamento, pela ação continuada da manipulação da moeda: sua mutação, ajuste, fábrica e refábrica... pelo seu principal protagonista, que é a monarquia, mas também por seus sócios interessados como a nobreza, o comerciante, enfim, os donos de todos e senhores da riqueza.

A literature survey of community participation in the natural gas sector in developing countries

PurposeThis paper aims to analyze the context of community opinions and participation in the natural gas sector in developing countries, a case study of Tanzania. To achieve this purpose, the study pointed out six facts, namely, information on the natural gas sector; awareness of the natural gas-related policies; laws and regulations and the creation of employment opportunities; local experts in the natural gas sector; the use of natural gas revenues; and natural gas for poverty reduction and improvement of social well-being.Design/methodology/approachThe study is a systematic review of the literature on community participation based on the relevant studies published between 2010 and 2018. A comprehensive literature review was carried out following the seven-step model whereby relevant themes from different potential bibliographic databases such as Google Scholar were systematically selected, compiled and analyzed using descriptive methods.FindingsThe study revealed that despite the various efforts made by the governments and other stakeholders to promote community participation, there is an inadequate level of community participation in the natural gas sector in developing countries. There are limited local experts for natural gas operations and low transparency on natural gas contracts, agreements and revenues. Therefore, there is the need to raise awareness for a highly informed society with a clear sense of ownership of the natural gas wealth among the local communities. Moreover, transparency and accountability are recommended for the sustainable natural gas sector development.Originality/valueThis paper offers new and current cross-sectoral inclusion, opinions, hopes and concerns of the community on the natural gas sector management in developing countries.

The Power of the Will of Faith and the Point of View of Islam

In this paper we present the Will of Faith and the Point of View of Islam confronting the free world because of its adherence to the principle of economic freedom, which calls for the rule “let him work, let him pass.” This principle has brought about deep inequality between the rich and the poor, where the rich are a bit more than 10% of the population possessing 90% of the wealth, whereas the rest of the population does not have more than 10% of it. This is due to the wrong view of the free world about the economic problem caused by the relative scarcity based on Metros theory. In his theory, Matros, argues that the increase of population follows the engineering progression (1, 2, 4, 8, 16, ···) and the arithmetical progression on the increase of the wealth (1, 2, 3, 4, 5, 6). This theory has been adopted by the free doctrine people to solve the problem by increasing the size of the national income without intervening in the distribution of wealth that would reach the hands of each individual. Hence, the one who has the wealth is the one having the capital. Islam, on the other hand, believes that the economic problem is due to bad distribution of wealth and that solving the problem is achieved by ensuring the accessibility of wealth by each citizen, increasing production, and controlling contracts and conditions. The related work that the power of will over contracts and conditions through controlling the possession of wealth and fair distribution of it guarantees the needs of each individual and creates an economic balance so as to prevent the encroachment of the individual on society and the encroachment of society on the individual.

Endogenous Hours and the Wealth of Entrepreneurs

US entrepreneurs typically work long hours in their firms and these hours form a large part of the firms' labor input. This paper studies the role of endogenous owner hours in shaping the wealth distribution among entrepreneurs. We introduce owners' endogenous labor supply into a model of entrepreneurial choice and financial frictions. The model fits well the levels and the dispersion of wealth among entrepreneurs. Long owner hours incentivize poor, highly productive individuals to be owners and help the most productive owners to accumulate large quantities of wealth. On net, owners working long hours decreases the median owner wealth and increase wealth dispersion among owners. Differently, the ability to work sufficiently short hours incentivizes owners to run low productivity firms with high wealth to income ratios. Finally, alternative calibrations ignoring the endogenous labor supply of owners lead to owners that are much richer than in the data and overstate the effect of financial frictions in the economy.

Is Inequality Really Declining in Malaysia?

ABSTRACTOfficial statistics report rapidly declining household income inequality in Malaysia during the 2000s. However, this phenomenon has passed unnoticed and unexplained, while public discourse widely asserts that inequality has either risen or remained high. In particular, salaries and wealth are perceived to be increasingly concentrated at the top. Difficulties in accessing national income survey data necessitate exploration of other data sources, which permit this article to investigate trends in personal earnings and wealth inequality. Recent information on retirement savings, as well as public sector employment and car sales, indicate earnings rising moderately or holding steady, marked by higher growth in the uppermost segments. On wealth ownership, housing sales record high growth at the top and lagging growth in the bottom half; while unit trust fund ownership suggests similar trends, particularly within the majority Bumiputera population. Our findings, while exhibiting gaps, shed some light on the state of inequality and broadly concur with public perceptions of rising or persistently high inequality. This study also underscores the multi-dimensionality of inequality and the importance of researching structural inequalities in labour and asset markets.

Wealth Ownership and Inequality in India: A Socio-religious Analysis

This article analyses wealth inequality across socio-religious groups in the country and across the states based on the All India Debt and Investment Survey conducted by the National Sample Survey Office in 2013. The result shows that one-fourth of the total wealth is concentrated in the hands of the top 1 per cent households, whereas 75 per cent of the total wealth is concentrated in the top 20 per cent households. On the contrary, a very small proportion of the assets, that is, 3.4 per cent, are owned by the bottom 40 per cent households. The Hindu high castes (HHCs) have the highest ownership of wealth as compared to any other socio-religious group with respect to the share of wealth and average household wealth ownership. Interestingly, HHCs also have the highest inequality as compared to any other group.

The power of lump sums: Using maternity payment schedules to reduce the gender asset gap in households reached by Brazil’s Bolsa Família conditional cash transfer

Abstract Can cash assistance have an influence on gender relations inside a household? What are the processes through which this influence occurs? The present article investigates the everyday uses of money that women receive from two gender-targeted social programs in rural Brazil. Bolsa Familia is a conditional cash transfer that disburses money to women every month. The Maternity Wage is a program that gives a sizeable lump sum to women when they become pregnant. Drawing from two years of ethnographic research in two villages in Northeastern Brazil, I show how these different payment schedules can lead to different patterns of investment in assets. I find that women typically spend monthly cash assistance on items, like clothing and furniture, that correspond to local stereotypes about feminine property. By contrast, lump sums are used by women to purchase income-generating assets, like cows and fields, that would normally be held by men. Monthly money reinforces gendered stereotypes about assets, while lump-sum money challenges those stereotypes. Lump sums thereby enable women to become the owners of wealth that generates a flow of income over time. I identify two key qualities that underlie this change: a payment’s large size and its unpredictability. These qualities affect the mental accounting that beneficiaries use to understand their money and the institutions through which they save it. By outlining such processes, the article brings the literature on conditional cash transfers into dialogue with studies on the gender asset gap. Lump sums can help to re-gender a household’s assets. This finding suggests that cash assistance policy, particularly in the case of conditional cash transfers, might be able to have an effect on gender equity by making use of targeted lump sums.

Revisiting Revocation upon Divorce?

In an increasing number of states, divorce presumptively renders an ex-spouse ineligible to benefit from the testator’s will. Divorce may also impact other revocable dispositions in favor of the ex-spouse and exclude the ex-spouse’s family members from benefitting in any way from the decedent’s death. Revocation upon divorce statutes have become more common as divorce itself has become more common, and courts have been quite rigorous in interpreting the statutes, creating an almost irrevocable presumption of revocation. By contrast, other countries vary in their approaches to the effect of a divorce on testamentary and nonprobate transfers to an ex-spouse and family members. This Article challenges the utility of the presumption of revocation upon divorce. In raising questions about the appropriateness of the presumption, this Article traces developments in divorce law—from the purely fault system to the no-fault system to contemporary, and more collaborative, approaches to divorce—to show the historical shifts towards contemporary attempts to dissolve the acrimony often associated with divorce. This Article also explores the relatively limited sociological and empirical material on actual individuals’ preferences for disposition of their estates to ex-spouses and their families. And it examines the class, gender, and race aspects of wealth ownership as part of an effort to determine who is most likely to have probate and nonprobate assets affected by the revocation statutes. Finally, this Article discusses alternative approaches for states to consider.

Traditional gender inequalities limit pastoral women\u2019s opportunities for adaptation to climate change: Evidence from the Afar pastoralists of Ethiopia

Climate change affects different demographic groups differently. Pastoral women, being among the poorest of the poor, are expected to be highly vulnerable to climate change. However, empirical evidence on gender-differentiated vulnerability and adaptive capacity is limited. A triangulation of different techniques including focused group discussions, individual interviews, case studies and structured observations was used to see if there is a difference in factors that determine the level of vulnerability and adaptive capacity between Afar men and women. Gender inequality inherent in the Afar customary tradition (Adda) acts as a risk multiplying factor, resulting in women being more vulnerable than men to climate change-induced food insecurity and related risks. Moreover, men have better scores in different variables determining vulnerability and adaptive capacity, including wealth ownership, wealth inheritance, household-level decision power, opportunities for community-level participation, household burdens and health or body mass index (BMI). Despite their limited scores in many of these factors, Afar pastoral women make higher contributions to household-level adaptation to recurrent drought and weather variability. A gendered approach that recognizes the difference in potentials, limitations and vulnerabilities of pastoral women and men is required for successful implementation of adaptation measures.