The Kuznets curve of the rich

A long-standing interest in the relationship between inequality and sustainable growth continues to fascinate economists among other social scientists. It must be noted, however, that most empirical efforts have focussed on the income inequality–growth nexus, while studies on wealth inequality are much scarcer. This study attempts to fill such a gap in the literature by assessing the correspondence between the top 1 percent's wealth share and economic growth. Employing time series cointegration techniques, we study the experience of France and the United States from 1950 to 2014. Our estimates suggest that the output growth rate is an inverted-U-shaped function of the wealth share of the top 1 percent. The estimated relationship is robust to variations in control variables and estimation methods. We compute the local optimal wealth share, understood as the share of wealth compatible with the maximum growth rate, and show that France is growing close to its long-run potential, while the United States is significantly below its.