Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
The share of wealth held by the top one percent of Americans has increased from about 24% in 1980 to 40% in 2010. This paper examines the role played by the decline in the world interest rates in accounting for this observation. Our model consists of households who either run a business or work for others. In this environment, the decline in the interest rate increases wealth inequality since entrepreneurs benefit from lower financing costs while workers face lower returns. This channel can account for over 60 percent of the increase in the top wealth shares in the data.