Some authors prefer to place their manuscript LaTeX source files in a subfolder, and other research artefacts (figures, tables, etc) in another subfolder. This example shows how this workflow can be maintained on Overleaf, by providing a top-level main.tex that pulls in the real main LaTeX file from the subfolder using the import package.
Understanding the origins of wealth inequality is critical in the debate over what, if anything, to do about it. In this note, we propose a simple model which is still rich enough to reproduce observed patterns of wealth inequality. We call it the Concentrated Asset Betting (CAB) model. A key element of CAB is a phenomenon known in the gambling world as “over-betting the edge.” The model we propose is based on the observation that a high fraction of investors have experienced sub-par growth in their savings, after allowing for consumption and philanthropy, relative to the tremendous long-term growth in the public stock market. Some of the reasons put forward to explain the shortfall in investor returns include investment fees, commissions and taxes. Our model suggests there may be something even larger and more insidious at work – pervasive and systematically poor money management.
This paper explores the relationship between ethnic fractionalization and social capital between 1990-2005. First, using data from 1990, 1997 and 2005 we test for time differences in the impact of ethnic fractionalization on social capital. Subsequently, we examine U.S. data for evidence consistent with the proposed outcomes in the conflict, contact, or hunker-down theses discussed in Putnam (2007). Putnam (2007) examines what happens to “trust" or “social capital" when individuals of different ethnicity are introduced into social, political and/or economic groups over time. Using an instrumental variable (IV) estimator, we find little evidence of heterogeneity in the impact of ethnic fractionalization on social capital over our period of analysis. In addition, using both fixed effect and IV estimators, we reject the contact hypothesis, but find evidence consistent with the outcomes predicted in both the conflict hypothesis and Putnam’s hunker-down hypothesis, in inter-ethnic relations. Due to data limitations, we are unable to test directly which of these two thesis are more relevant for the U.S experience. However, we provide suggestive evidence in support of the conflict hypothesis over the hunker-down hypothesis. Our results suggest that between 1990-2005, as communities in the U.S became more diverse, there was a tendency for social capital to decline.