Business cycle models often abstract from persistent household heterogeneity, despite its potentially significant implications for macroeconomic fluctuations and policy. We show empirically that the likelihood of being persistently financially constrained decreases with cognitive skills and...

"Policymakers and economists disagree about the impact of bank regulations on the distribution of income. Exploiting cross-state and cross-time variation, we test whether liberalizing restrictions on intra-state branching in the United States intensified, ameliorated, or had no effect on income...

We fully solve an assignment problem with heterogeneous firms and multiple heterogeneous workers whose skills are imperfect substitutes, that is, when production is submodular. We show that sorting is neither positive nor negative and is characterized sufficiently by two regions. In the first...

Over the past four decades, income inequality grew significantly between workers with bachelor's degrees and those with high school diplomas (often called "unskilled"). Rather than being unskilled, we argue that these workers are STARs because they are skilled through alternative routes--namely...

For whom has earnings risk changed, and why? To answer these questions, we develop a filtering method that estimates parameters of an income process and recovers persistent and temporary earnings for every individual at every point in time. Our estimation flexibly allows for first and second...

This article reviews the recent literature on the dynamics of global wealth inequality. I first reconcile available estimates of wealth inequality in the United States. Both surveys and tax data show that wealth inequality has increased dramatically since the 1980s, with a top 1% wealth share...

Motivated by the recent rise of populism in western democracies, we develop a model in which a populist backlash emerges endogenously in a growing economy. In the model, voters dislike inequality, especially the high consumption of "elites." Economic growth exacerbates inequality due to...

This paper develops and estimates a two-factor model of intergenerational skill transmission when earnings inequality reflects differences in individual skills and other non-skill shocks. We consider heterogeneity in both initial skills and skill growth rates, allowing variation in skill growth...

Immigration is often viewed as a proximate cause of the rising wage gap between high- and low-skilled workers. Nevertheless, there is controversy over the appropriate framework for measuring the presumed effect, and over the magnitudes involved. This paper offers an overview and synthesis of...