Full Citation

Title: Entrepreneurs, Managers and Inequality

Citation Type: Journal Article

Publication Year: 2019

ISBN:

ISSN:

DOI: 10.1016/J.RED.2018.12.006

NSFID:

PMCID:

PMID:

Abstract: Income concentration in the U.S. rose sharply since the 1970s. But the share of wealth held by the top 1 percent increased less. This can be partially accounted for by a quantitative model of occupational choice, in which rich individuals choose to become entrepreneurs or managers. Collateral constraints induce entrepreneurs to hold more wealth, while managers earn higher wages as a result of competitive assignments to firms. Declining tax progressivity from 1970 to 2000 replaces top entrepreneurs with top managers, which can account for 65% and 30% of the increase in the share of wages and income earned by the top 1 percent, respectively. At the same time, the share of wealth held by the top 1 percent remains stable, as entrepreneurs decumulate but managers accumulate wealth.

Url: https://www.sciencedirect.com/science/article/pii/S1094202518303600?via%3Dihub

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Authors: Lee, Sang Yoon (Tim)

Periodical (Full): Review of Economic Dynamics

Issue:

Volume: 32

Pages: 42-67

Data Collections: IPUMS CPS

Topics: Labor Force and Occupational Structure, Other

Countries: