Wealth Inequality: Data and Models

Abstract

In the United States wealth is highly concentrated and very unequally distributed: the richest 1% hold one third of the total wealth in the economy. Understanding the determinants of wealth inequality is a challenge for many economic models. We summarize some key facts about the wealth distribution and what economic models have been able to explain so far. * We gratefully acknowledge financial support from NSF grants (respectively) SES-0318014 and SES-0317872. We are grateful to Marco Bassetto, Wojciech Kopczuk and an anonymous referee for helpful comments. The views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Chicago, the Federal Reserve System, or the NSF.

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