The debate over inequality often focuses on income, or how much money people earn. But perhaps even more important is wealth, or how much money people have. A person’s income can vary significantly from one year to the next, but wealth tends to be more durable, not just from year to year but from generation to generation. In this paper, the authors construct a new time series on wealth from Federal Reserve, Internal Revenue Service and other data. They find that wealth inequality, like income inequality, has increased significantly in recent decades. In 1978, the richest 0.1 percent of households held about 7 percent of all household wealth; in 2012, they controlled 22 percent. (The top 0.1 percent in 2012 comprised about 160,000 families with net assets above $20 million.) But wealth inequality still isn’t as high as it was in 1929, when the top 0.1 percent had 25 percent of all wealth. Overall, the authors find that the bottom 90 percent haven’t seen any increase in wealth since the mid-1980s after adjusting for inflation.
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