Simon Toussaint

@simontoussaint.nl

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Lecturer, Leiden University | Dynamics of wealth concentration | Macro + (Public) Finance + Econ History | Cellist and Baritone www.simontoussaint.nl

Koot en Bie als Jacobse en Van Es met de Tegenpartij
Riemann surface of the upper-incomplete gamma function
Receiving the PhD
In neoclassical models of investment, market value is related to capital viaTobin’s marginal 𝑞, the shadowvalue of an additional unit of investment. Hayashi (1982) shows that if firms are price takers and face constant returns to scale, marginal 𝑞 and average 𝑄 (the firm’s ratio of market value to capital stock) are the same: Market value is a linear function of capital, or 𝑉_𝑡 = 𝑞𝐾_𝑡 .
Robust Estimation of Private Business Wealth* Job Market Paper Simon J. Toussaint† November 14, 2024 [Most recent version here] Abstract Estimating the market value of private businesses is essential for understanding both aggregate firm dynamics and top wealth inequality, yet these values are inherently unobservable. This paper introduces an econometric approach that treats the gap between true market values and initial estimates as measurement error. I employ time-series restrictions on these errors as moment conditions within a GMM framework, and use the fitted values from these estimations as error-free estimates of private business wealth and capital stocks. Applying this method to Dutch administrative data linking the universe of firms to their owners, I find that aggregate private business wealth increases by 30% of GDP initially, and is more stable than the unadjusted series. Top 1% and 0.1% wealth shares increase by 3–5 percentage points, peaking at 38% and 20%, respectively. Adjusted returns to firm wealth exhibit a steeper gradient across the wealth distribution than unadjusted returns, consistent with models of return heterogeneity.