Open Banking initiatives aim to make payment data interoperable across institutions. I examine the value of this interoperability in lending using data that link borrowers’ payment histories with non-bank small-business loans in India. Payment data improve lenders’ ability to screen and monitor loans beyond traditional sources, including credit bureaus. These information sources are complementary because they specialize in different determinants of repayment. Subsample analysis shows that payment histories primarily reflect real-time repayment ability, while a natural experiment removing borrower discretion confirms that credit bureaus primarily measure willingness to repay. Shifting to payment-based screening benefits most borrowers but disadvantages those with poor credit scores and thin payment records, highlighting distributional trade-offs in Open Banking implementation.

Thomas Piketty’s Capital in the Twenty-First Century stands as a landmark in economic literature, deservedly lauded for its engaging narrative on inequality. I argue that one of the important features of this book was the use of a simple result in economic theory as a rhetorical device to explain the history of wealth accumulation and concentration. Piketty reformulates it as the “second fundamental law of capitalism” and explains differences in wealth-income ratios (β) in rich countries using variation in growth rates. I use a larger sample of countries, whose data appeared after the publication of Capital, to show that this law is not generalizable. This result is driven by the fact that despite structural differences in per-capita growth, wealth-income ratios are large in many big economies.

This paper analyzes the upper tails of wealth, income, and consumption in India over the period 2012-18 using rich- lists, wealth surveys, income tax returns and consumer expenditure surveys. We find the upper tail to obey a power- law in all three economic resources. Comparing our estimates in 2012 – where we possess data on wealth, income, and consumption simultaneously – we find that the upper tail of wealth is most concentrated, income slightly less, and consumption is much less concentrated. Unlike wealth and income, the Pareto coefficients for consumption are estimated to have a well-defined mean and variance. Our findings are suggestive of convex saving functions in the income distribution.

This paper provides new and improved estimates of wealth concentration in India over 2012-2018. Official surveys show a decline in wealth inequality and mean wealth per-adult for the first time in three decades. We argue that although these wealth surveys are meant to be nationally representative, they underestimate the upper tail of the Indian wealth distribution -- top wealth levels appear orders of magnitudes below externally measured estimates and unrepresentative of increasing stock-market participation over this period. Because wealth is so highly concentrated, wealth in the upper tail matters a lot for realistic estimates of wealth inequality. By combining official surveys and some of the largest datasets of India's richest persons, we provide new estimates of top wealth shares and total personal wealth in India. We find that personal wealth is underestimated by nearly 54% in official data, and this gap has increased sharply over the 2010s. Our revised estimates show wealth concentration to have sharply increased over 2012-2018. The share of India's top 1% is higher than similar estimates for Asia, and second only to Russia.

This paper presents new series on the evolution of wealth‐income ratios in India. I construct a new macro‐history dataset, covering the period 1860–2018 and containing historical series on the composition and level of national wealth, national income, savings, investment and prices. These data show a gradual rise in India's national wealth‐to‐national income ratio (β = W/Y) since the mid‐twentieth century, with the main takeoff occurring around the end of the twentieth century. I ascribe this pattern to the steady increase in saving rates since independence which were themselves the consequence of income shifts in favor of higher saving sectors under India's mixed economy era. Prior to 1950, wealth‐income ratios fluctuated a lot on account of land prices and low economic growth. These series offer an alternative timeline of wealth concentration in the absence of long‐run distributional data. In colonial India, land was dominant in national wealth, and its ownership was concentrated. In recent decades the importance of capital and urban land—both also concentrated in ownership—has increased.

We assess Marx's hypotheses about capitalist development on a global scale by constructing a new dataset of Marxist variables (profit rates, exploitation rates, composition of capital, and shares of productive activity) for 43 major economies, derived from world input-output data and national accounts in the 2000-2014 period. Consistent with Marx's hypotheses, the average profit rate declines at the world level, between countries, and within countries. The global rate of exploitation increases until 2008 but stagnates after the financial crisis, while capital intensity continued to increase. At the cross-country level, rich countries became increasingly dominated by unproductive activity. China absorbed much of the world's productive activity and kept the labor share of value added roughly constant at the world level.

The standard interpretation of inequality uses a number, such as the Gini coefficient, to compare income inequality across countries. These numbers apply universal upper limits to the maximum feasible inequality (Gini = 100) in vastly diverse economies even though floors for socially acceptable living standards vary quite a bit in different societies. I develop a new measure of income inequality - the Nationally Representative Inequality Extraction Ratio (NR IER) - and apply it to 112 countries. The NR IER uses country-by-country social and economic parameters to measure the distance between the actual income distribution and the country-specific feasible limit (a counterfactual distribution). I ground the counterfactual distribution in a functional income concept, corresponding to Marx's concept of exploitation. NR IERs are inversely related to per-capita income and exceed the feasible limits in the world's poorest countries. However, I find little variation in extractive inequality between closed autocracies (e.g., China) - where corruption is expectedly extractive - and liberal democracies (e.g., USA). Controlling for different political regimes, the NR IER explains over 60 per cent of a person's income anywhere in the world.

Using 2011-12 consumption micro-data, we find that nearly one-third of the variation in living standards in India can be explained by location alone. Consumption levels and locational inequality are positively related. In effect, from an individual’s perspective, living standards are higher in richer, but more unequal, locations in India. The central factor behind these findings is the large difference in average consumption levels between rural and urban India and continued divergence in per-capita incomes between rich and poor states. Our results provide a possible explanation for the persistence of economic migration from rural to urban areas within a fast-growing emerging economy. While individuals cannot easily alter specific characteristics like their caste or religion, they have some freedom to change their location to enjoy better living standards.

US incomes follow a two class pattern -- an insight originally shown by physicists in the econophysics literature. The upper class fits a power-law, or Pareto distribution, while the lower class follows an exponential distribution. Growing income inequality is explained by rising between-class inequality over the 2004-2018 period. The upper class has two important features which I analyze: it has expanded in size, accounting for the top 6 percent of the income distribution in 2018, and it is more complex than just capitalists because the labor income distribution also follows a two-class structure. This shows that homoploutia -- individuals rich in both labor and capital income -- is a defining characteristic of the upper class under modern capitalism. I argue that despite what appear as blurred lines from a traditional sense, income inequality and its rise in the US is very much a class based phenomena.

Between 1953 and 1985 India implemented various progressive taxes on personal wealth. I use estate tax returns to compute top wealth shares (top 1%, top 0.1% and top 0.01%) over 1966-1985; a period marked explicitly by a dirigiste policy environment. These new series suggest that wealth concentration in India reduced substantially during the 1970s. Although the decline affected the entire top 1%, the losses faced by the top 0.01% were especially large. Combined with identical trends in top income shares, it appears that the 1950-80 expropriations of India’s rich had similarities to institutional transitions and shocks faced by European elites in the early to mid twentieth century.

The evolution and metamorphoses of wealth underpins historical questions of growth and distribution. This article develops new, homogenized series of the wealth-income ratio in India over fifteen transformational decades: from colonial rule after the demise of the Mughals to the contemporary rise of Indian capitalists on a global scale. Over the long run, there were two major waves of wealth accumulation. The first ended around World War II and was characterized by a Ricardian vision - landlords appropriated surplus value under low productivity conditions, benefiting from a large divergence of asset prices relative to consumer price infl ation. Between 1939 and 2012, the Indian wealth-income ratio mimics the U shaped trend observed in other large economies. The second wave (between 1960 and 2012) is partly explained by capital accumulation but price effects consistently dominate large changes in wealth dynamics. Implications for distribution are noteworthy. Upswings of the wealth-income ratio are nearly always accompanied by rising concentration of economic power. Finally, over the last three decades the structure of national wealth favors private wealth over public capital. These ndings underline an important stylized fact: despite large structural differences between rich and emerging countries, wealth-income ratios are rising everywhere in the twenty first century.

This paper presents new series on the evolution of wealth-income ratios in India. I construct a new macro-history dataset, covering the period 1860- 2018 and containing historical series on national wealth and its components, national income, savings, investment and prices. These data show a gradual rise in India’s national wealth-to-national income ratio (β) since the mid- twentieth century, with the main takeoff occurring since the 1980s. This recent rise in β is concurrent with India’s transition to a high-growth emerging economy, characterized by capital accumulation and growing importance of a modern sector. Prior to this period (1900-1980), the Indian economy struggled to hit growth rates over 1-2 percent per-capita and wealth-income ratios varied inversely with economic growth. At low growth rates, regardless of the level of development, wealth-income ratios are more sensitive to relative asset prices. On the basis of these findings, I propose a turning point in the relationship between β and economic growth which explains the simultaneous rise of wealth-income ratios in both slow growth (rich) and high growth (emerging) economies since the late twentieth century.

We present a demand driven growth and distribution model of capitalists and workers. Our model highlights dynamics of wealth distribution with class-differentiated savings which are themselves distinct from the decision to invest and accumulate capital. At the steady state, investment parameters do not influence the distribution of wealth but there exists a long run paradox of thrift effect which distributes wealth to capitalists whilst simultaneously exerting downward pressure on the level of aggregate demand. Applied to annual US data from 1950-2015 we find that the share of capitalist wealth will stabilize at approximately 68%, fairly close to the Kotlikoff-Summers dynastic capital range. The demand driven nature of our model implies a key role for the capitalist saving rate in jointly reducing macroeconomic performance and increasing wealth inequality. This may be an important issue in mature, low growth capitalist economies. (C) 2018 Elsevier B.V. All rights reserved.

Between 1953 and 1985 India implemented various progressive taxes on personal wealth. I use estate tax returns to compute top wealth shares (top 1%, top 0.1% and top 0.01%) over 1966- 1985; a period marked explicitly by a dirigiste policy environment. These new series suggest that wealth concentration in India reduced substantially during the 1970s. Although the decline affected the entire top 1%, the losses faced by the top 0.01% were especially large. Combined with identical trends in top income shares, it appears that the 1950-80 expropriations of India’s rich had similarities to institutional transitions and shocks faced by European elites in the early to mid twentieth century.

This paper is based on a social accounting matrix (SAM) which incorporates the size distribution of income based on data from the BEA national accounts, the widely discussed 2012 CBO distribution study, and BLS consumer surveys. Sources and uses of incomes are disaggregated by household groups including the top 1 percent. Their importance (including saving rates) differs markedly across households. The SAM reveals two transfer flows exceeding 10 percent of GDP via fiscal (broadly progressive) and financial (regressive) channels. A third major flow over time has been a ten percentage point increase in the GDP share of the top 1 percent. A simulation model is used to illustrate how 'feasible' modifications to tax/transfer programs and increasing low wages cannot offset the historical redistribution toward the well-to-do.

This article explores the determinants and distribution of household wealth. Looking at U.S. data since 1980, it finds convincing evidence that top incomes were saved at high rates and contributed to the steady increase in the household wealth-income ratio. First, I rule out counterclaims regarding the role of housing and real estate prices finding little evidence of their influence on the trends and magnitudes of household net worth relative to disposable income. With savings as the remaining explanation, I present an accounting decomposition formula that captures savings rates for any reference group using the dynamics of intergroup accumulation rates. This methodology is applied to data from national accounts, balance sheets, and income distribution statistics in order to compute saving rates for the top 1 percent of households in the U.S. income distribution. The estimates also support the idea that top income earners have outsaved other households, thereby capturing an increasing share of wealth.

Did India's stagnant growth performance until the 1980s increase or decrease the wealth of the elite? Using estate tax data I compute a series which highlights the relative importance of top wealth holders in India between 1961-1986. I find that a combination of policies and shocks were able to significantly depress the personal wealth of the Top 0.1% over this period. A portfolio decomposition by asset categories for the rich reveals that there was a U shaped trend in the average value of movable assets while wealth invested in land significantly declined. Disparity within top wealth groups also follows a shrinking and swelling, consistent with the intervention of the state in private capital. These results have implications for the equalizing forces inherent in tax policy vis-a-vis the rich and the role of the state in regulating capital in poor nations.

The US national income and product accounts are restated in the form of a social accounting matrix or SAM. Using data from the Congressional Budget Office and the Consumer Expenditure Survey of the Bureau of Labor Statistics, the SAM is extended to include seven household groups in the size distribution of income. Aspects of rising inequality are pointed out, and a simple demand-driven model to set up to examine redistributive policies.