Clara Martinez-Toledano, Imperial College

Private Capital Markets and Inequality

Abstract

This paper studies the interplay between the rise in private capital and the rise in income inequality over the last two decades in the US. Using novel data sources, we first document that high-net-worth individuals (HNWI) have increased its importance in private capital markets mainly through venture investments. We then exploit state-level variation in the exposure to capital gains tax reforms and find that the increasing participation of HNWI in private capital markets has led to higher income concentration. Finally, we show that the rise in income inequality is mainly driven by higher returns on private investments at the top.

Andreas I. Mueller holds the Professorship for Macroeconomics and Labor Markets at the Department of Economics at the University of Zurich and is an Affiliated Professor at the UBS Center for Economics in Society. Prior to joining the University of Zurich, he was an Associate Professor at UT Austin and Columbia Business School. Mueller received his doctorate from the IIES, Stockholm University, and was awarded the Arnbergska Prize for his dissertation work by the Royal Swedish Academy of Sciences. His research spans a broad spectrum of issues in macroeconomics, labor economics, and monetary economics and has been published in leading academic journals such as the American Economic Review, Econometrica, the Journal of Political Economy and the Review of Economic Studies and covered in the Economist, New York Times, Wall Street Journal and Financial Times. Professor Mueller is a Research Affiliate at the Center for Economic Policy Research (CEPR), a Research Fellow at the Institute of Labor Economics (IZA), an Associate Editor at the Swiss Journal of Economics and Statistics (SJES) and an Associate Editor at the Journal of Monetary Economics (JME).

Clara Martínez-Toledano is an Assistant Professor of Financial Economics and Wealth Distribution Coordinator at WID.world. Her research interests are household and public finance. Recent work focuses on understanding the determinants of wealth accumulation and wealth inequality dynamics within and across countries.

Clara holds a B.A. and M.A. in Economics from Carlos III University and a M.A and Ph.D. in Economics from Paris School of Economics. Before joining Imperial, she was a Postdoctoral research scholar at Columbia Business School.

You can read more about Clara Martínez-Toledano here

CEBI contact: Asger Lau Andersen