Income inequality has sharply increased in the United States since the late 1970s, yet currently available evidence suggests that wealth concentration has not grown nearly as much. One possible explanation is that rising inequality is purely a labor income phenomenon: despite an upsurge in top wage and entrepreneurial incomes (Piketty and Saez, 2003), the working rich might not have had enough time yet to accumulate a lot of wealth—perhaps because they have low saving rates, face high tax rates, or have low returns on assets. Should this be true, the implications for analyzing the US economy and for policy-making would be far-reaching. Our paper, however, challenges this view. On the basis of new, annual, long-run series, we find that wealth inequality has considerably increased at the top over the last three decades. By our estimates, almost all of this increase is due to the rise of the share of wealth owned by the 0.1% richest families, from 7% in 1978 to 22% in 2012, a level comparable to that of the early twentieth century.

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