"Markups, Taxes and Rising Inequality"
co-écrit avec A. Eyquem, B. Garbinti and J. Goupille-Lebret

Abstract :
We analyze income and wealth inequality dynamics through the lens of an heterogeneous-agent model with three key features : (i) an explicit link between firms’ markups and top in-come shares, (ii) a granular representation of the tax and transfer system, and (iii) three assetswith endogenous portfolio decisions. Using counterfactual analyzes, we look at how changesin markups, taxes, factor productivity, and asset prices affected inequalities between 1984 and2018 in France. Rising markups account for the bulk of rising pretax income inequality. Thedrivers of rising wealth inequality are more complex. Rising markups and changes in taxescontribute to raise wealth inequality by increasing pretax income inequality and inequality insaving rates between wealth groups. Asset prices – the boom in housing prices – mechanicallyredistribute wealth from top and bottom wealth groups to the upper middle wealth group,whose wealth is mostly held in the form of housing, but are partly offset by a rise in savingrates of top wealth groups. Our results highlight the key role of endogenous saving decisionsin response to exogenous variables as a key driver of wealth inequality