Advanced seminar in Economics - Daniel Waldenström (IFN Stockholm)

This paper reevaluates global wealth inequality through the lens of human capital, employing Jorgenson and Fraumeni's 1989 methodology to quantify its monetary value as the present value of discounted future labor earnings. Utilizing microdata from the Luxembourg Income Study and various sources of aggregate data on the working population and wealth, we stratify the sample by occupation, age, sex, country, and temporal factors. Our empirical analysis reveals a mitigated disparity in wealth distribution when human capital is incorporated. Specifically, labor-derived wealth supersedes financial wealth as the dominant asset for households below the top decile. The importance of human capital is amplified among the lower decile, persisting across heterogeneous economic conditions.