Wealth inequality has risen sharply in recent decades. We study how restricted access to private firm innovation contributes to this rise using a structural model of wealth accumulation with scale dependence. We construct a new long-run measure of innovation value that includes both public and private firms and document a pronounced shift of value creation toward private firms, whose equity is concentrated among high-wealth individuals. Calibrated to the 1979 wealth distribution, the model shows that exclusive access to private-firm innovation accounts for between half and two-thirds of the subsequent increase in the top 1% wealth share.
- Private Innovation and Wealth Inequality
- Mehran Ebrahimian - Stockholm School of Economics, Department of FinanceAlexander Ljungqvist - Stockholm School of Economics, Department of Finance
- Swedish House of Finance Research Paper Series
- Swedish House of Finance (SHoF); Stockholm, Sweden
- 42
- Department of Finance; Swedish House of Finance
- Swedish
- Working paper