Heterogeneous Dynasties and Long-Run Mobility∗

Jess Benhabib, Alberto Bisin, Ricardo T. Fernholz

    Research output: Contribution to journalArticlepeer-review


    Recent empirical work has demonstrated a positive correlation between grandparent-child wealth rank, even after controlling for parent-child wealth rank, and a positive correlation between dynastic wealth ranks across almost six hundred years. We show that a simple heterogeneous agents model with idiosyncratic wealth returns generates a realistic wealth distribution, but fails to capture these long-run patterns of wealth mobility. An auto-correlated returns specification of this model also fails to capture both short- and long-run mobility. However, an extension of the heterogeneous agents model that includes permanent heterogeneity in wealth returns is able to simultaneously match the wealth distribution and short- and long-run wealth mobility.

    Original languageEnglish (US)
    Pages (from-to)906-925
    Number of pages20
    JournalEconomic Journal
    Issue number643
    StatePublished - Apr 1 2022

    ASJC Scopus subject areas

    • Economics and Econometrics


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