We analyze the long-run optimal combination of wealth and labor tax rates in a model where wealth-to-income ratios and wealth inequality are rising endogenously. We consider rich (lenders) and poor (borrowers) households, financial and housing wealth, and find that a ''realistic'' optimal steady...

Using a simple two-sector life cycle economy with housing services and bequests, we show that a rising labor efficiency in the general economy relative to the construction sector can go a long way toward explaining a significant fraction of the rising trends in wealth-to-income ratios, housing...