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UID:bfc9511008671d94a26b8e182cbe27b9
CATEGORIES:Seminars
CREATED:20150211T181030
SUMMARY:Marnix Amand - HEC Lausanne
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:Entrepreneurship, Firm Sales and the Dynamics of the Wealth Distribution\nA
 bstract:\nThis paper studies the dynamics of the wealth distribution in a h
 eterogeneous agent economy with entrepreneurship. Using a novel panel datas
 et of household wealth, I study how stable the top of the wealth distributi
 on is, and the characteristics of households that move into the top of the 
 wealth distribution. I show that (1) households move in and out of the top 
 of the wealth distribution at high frequencies - e.g., up to 15% of househo
 lds in the top-5% in a given year were not present the previous year; (2) a
  third of those households display “wealth jumps”, i.e., sudden large incre
 ases in wealth; (3) entrepreneurs are vastly overrepresented in the top of 
 the wealth distribution and among the upwardly mobile households. More gene
 rally, being an entrepreneur greatly increases the probability of being or 
 becoming a millionaire. The first two facts are at odds with existing quant
 itative models of the wealth distribution, which do not allow for wealth ju
 mps and display very slow wealth accumulation processes. The last fact moti
 vates the second part. The literature has shown that entrepreneurs are an e
 ssential element in explaining the wealth distribution. However, they were 
 modeled as “lifetime entrepreneurs”, stuck with their firm for life and pat
 iently accumulating wealth. This allows for neither wealth jumps nor freque
 nt movements in wealth. I construct a quantitative model where entrepreneur
 s have the opportunity to sell their firm. In general equilibrium, I show t
 hat this model replicates the known facts of the wealth distribution as wel
 l as previous work, and also the new stylized facts described above. The po
 licy relevance of this work lies in the tax consequences: it is essential t
 o correctly model the incentives and dynamics of wealth creation when consi
 dering a tax on wealth. This work shows that even in partial equilibrium (i
 .e., neglecting the effects on the interest rate), a wealth tax can have ne
 gative effects by limiting the leverage entrepreneurs can access, and this 
 effect weakens with better financial markets.\n
DTSTAMP:20260421T160716Z
DTSTART:20141117T173000Z
DTEND:20141117T190000Z
SEQUENCE:0
TRANSP:OPAQUE
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