CONCLUDING COMMENTS AND RESEARCH PROSPECTS
In this chapter, we have surveyed the empirical and theoretical literature on the long-run evolution of wealth and inheritance in relation to output and income. The magnitude and concentration of wealth and inheritance (relative to national income) were very high in the eighteenth to nineteenth centuries up until World War I, then dropped precipitously during the twentieth century following World War shocks, and have been rising again in the late twentieth and early twenty-first centuries.
We have showed that over a wide range of models, the long-run magnitude and concentration of wealth and inheritance are an increasing function of r — g, where r is the net-of-tax rate of return to wealth andg is the economy’s growth rate, and we have argued that these predictions are broadly consistent with historical patterns. These findings suggest that current trends toward rising wealth-income ratios and wealth inequality might continue during the twenty-first century, both because of the slowdown of population and productivity growth, and because of increasing international competition to attract capital.We should stress, however, that this is an area where a lot of progress still needs to be made. Future research should particularly focus on the following issues. First, it becomes more and more important to study the dynamics of the wealth distribution from a global
perspective.53 In order to do so, it is critical to take into account existing macro data on aggregate wealth and foreign wealth holdings. Given the large movements in aggregate wealth-income ratios across countries, such macro-level variations are likely to have a strong impact on the global dynamics of the individual-level distribution of wealth. It is also critical to use existing estimates of offshore wealth and to analyze how much tax havens are likely to affect global distributional trends (see Zucman, 2014).
Next, a lot more historical and international data needs to be collected on inheritance flows. Last, there is a strong need of a better articulation between empirical and theoretical research. A lot more work has yet to be done before we are able to develop rigorous and credible calibrations of dynamic theoretical models of wealth accumulation and distribution.ACKNOWLEDGMENTS
We are grateful to the editors and to Daniel Waldenstrom for helpful comments. All series and figures presented in this chapter are available in an online data appendix.
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