The share of wealth going to the top 1 percent has reached its highest level in 3 decades
to take on the risks of starting and growing their own businesses. In this case, rising wealth inequality causes the lack of business dynamics, not the other way around.
The inability of families to start and grow their own business mirrors broader trends of falling income mobility. Harvard economistestimate that a child born in the 1940s had about a 90% chance of doing better than their parents, while a child born in the 1980s had only a 50% chance of having more income.
Declining mobility by itself is a sign of a staler economy, but it also negatively affects innovation. Children are less likely to become inventors when their parents are not in the top of the income scale. Chetty and his colleagues aptly term this phenomenon the “ .” This is not a result of lower test scores, but because falling income mobility reduces innovation as children from lower-income families experience fewer innovations around them and have fewer resources to take risks.down to double-digit or even single-digit billions will make the economy less innovative and dynamic doesn’t hold up.
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