Wealth Inequality in America: A Race Between the Stock and the Housing Market

Booming stock markets and the collapse of house prices in the aftermath of the 2008 financial crisis have increased wealth inequality in the US to a new historical high. Meanwhile, the racial wealth gap has stayed put for over 70 years, with virtually no progress in reducing wealth inequality between black and white households.  

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How Finance Affects Income Inequality

There is mounting evidence that income inequality and disparities in wealth have been rising in advanced economies in the recent decades. Using data on advanced and emerging economies, this column investigates the link between an economy’s financial structure—that is, the mix of bank-provided versus market-provided funds—and income inequality. Results show that the relationship is not monotonic. More finance reduces income inequality up to a point, but beyond that point inequality rises, especially if finance is expanded via market-based financing.    

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