Date/Time
Date(s) - 28/11/2025
11:00 am - 12:30 pm

Alexandre Gaillard, Assistant Professor from Brown University will present to our graduate students and faculty in KTH 334!

Alexandre Gaillard is an Assistant Professor of Economics at Brown University. His research explores how redistribution, measurement, entrepreneurship, and inequality shape macroeconomic fluctuations, growth, and the transmission of shocks across countries through trade. He combines theory, quantitative modeling, and large-scale micro data to study fiscal policy, social mobility, and business transfers. He earned his Ph.D. in Economics from the Toulouse School of Economics and was a postdoctoral fellow at Princeton University’s Julis-Rabinowitz Center for Public Policy & Finance.

He will present, “Consumption, Wealth, and Income Inequality: A Tale of Tails”.

Abstract

We argue that canonical heterogeneous-agent economies are unable to jointly account for the observed concentration of consumption, labor income, wealth, and capital income at the top. Using survey, administrative records, and transaction data, we provide empirical evidence that the distributions of these four variables exhibit asymptotic power-law behavior with a strict ranking of upper tail inequality in that order, from least to most unequal. This finding directly contradicts a central implication of precautionary savings models, in which consumption and capital income are asymptotically linear in, and therefore as concentrated at the top as, wealth. Mechanisms addressing the wealth concentration puzzle through return heterogeneity thus lead to a mirror consumption concentration puzzle. We show analytically and quantitatively that accounting simultaneously for the observed concentration of consumption, wealth, and capital income \mkred{can be achieved with} a combination of non-homothetic wealth-dependent preferences and scale-dependent returns to capital, and we identify the strength of these two mechanisms from the values of the Pareto tail coefficients. Finally, matching all four tails matters for determining the long-run elasticity of savings that governs the revenue-maximizing capital tax rate.

Learn more about Alexandre’s work and connect with him through his professional website.