AGE AND WEALTH: AN ANALYSIS OF GLOBAL TOP WEALTH DISTRIBUTION

Authors : M Aykut ATTAR

Pages : 25-44

View : 196 | Download : 473

Publication Date : 2020-12-28

Article Type : Research Paper

Abstract :This paper uses a simple economic model of age and wealth to study the dynamics of global top wealth distribution. The main purpose is to investigate whether and to what extent age—as a demographic variable—affects wealth accumulation. The global top wealth distribution is represented by that of Forbes billionaires, the wealthiest people in the world as listed each year by the Forbes Magazine. After documenting the main distributional properties of age and wealth of Forbes billionaires in the year 2018, the paper introduces the model economy and derives two testable hypotheses. First, the wealth of an individual relative to the average is an exponential function of his/her age as dictated by the theoretical model. Second, the distribution of wealth across individuals has a Pareto shape. Estimation results show that insert ignore into journalissuearticles values(i); age differences alone explain nearly one fourth of variation in relative wealth, and insert ignore into journalissuearticles values(ii); global top wealth distribution has a Pareto tail. Results also show that insert ignore into journalissuearticles values(i); the exponential form of the age-wealth relationship originating from the long-run equilibrium of the model economy performs significantly well in comparison to the linear and quadratic forms, and insert ignore into journalissuearticles values(ii); the estimated values of Pareto tails indicate that there exists a large degree of wealth inequality even among Forbes billionaires themselves.
Keywords : servet birikimi, eşitsizlik, yaş dağılımı, dinamik optimizasyon