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To launch the 2017-2018 Becker Brown Bag series, Eric Zwick, Assistant Professor of Finance and James S. Kemper Foundation Faculty Scholar, University of Chicago Booth School of Business and NBER, presented his paper, “Capitalists in the Twenty-First Century,” co-authored with Matthew Smith, Danny Yagan, and Owen Zidar.
Abstract: Have passive rentiers replaced the working rich at the top of the U.S. income distribution? Using administrative data linking 10 million firms to their owners, this paper shows that private business owners who actively manage their firms are key for top income inequality. Private business income accounts for most of the rise of top incomes since 2000 and the majority of top earners receive private business income—most of which accrues to active owner-managers of mid-market firms in relatively skill-intensive and unconcentrated industries. Profit falls substantially after premature owner deaths. Top-owned firms are twice as profitable per worker as other firms despite similar risk, and rising profitability without rising scale explains most of their profit growth. Together, these facts indicate that the working rich remain central to rising top incomes in the twenty-first century. Read the full paper here.
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About the Series:
The Becker Brown Bag Series was created to provide an informal setting in which prominent economists can present cutting-edge research and engage MBA students in discussion. The talks highlight the practical use of economics for answering real-world questions pertinent to businesses and policy makers.
While the Becker Brown Bag Series is directed towards current MBA students, others are welcome to attend.