Stéphane Benveniste*, Francesco Saverio Gaudio**
Kenza Elass : kenza.elass[at]univ-amu.fr
Camille Hainnaux : camille.hainnaux[at]univ-amu.fr
Daniela Horta Saenz : daniela.horta-saenz[at]univ-amu.fr
Jade Ponsard : jade.ponsard[at]univ-amu.fr
*Educational systems expanded over the 20th century in developed countries, and while most scholars found that it promoted social mobility, some argue that the top of the social hierarchy remains shielded over generations. In France, the most prestigious Grandes Écoles are elite institutions for higher education. They constitute the main pathway to top positions in the public and private sectors. The present work provides the first results on intergenerational social reproduction in these schools over more than a century. We construct an exhaustive nominative dataset of 224,264 graduate students from ten of the leading Grandes Écoles, spanning over five cohorts born between 1866 and 1995. We develop a new methodology within the literature using surnames to track lineages and find that families from ancient aristocratic lineage, Parisians, as well as descendants of graduates are highly over-represented in the top Grandes Écoles, throughout the 20th century. Across cohorts, children of Grandes Écoles’ graduates are 72 to 154 times more likely to be admitted, and up to 450 times to the exact same school than their father. This advantage appears remarkably stable for all cohorts born since 1916 and persists across multiple generations, emphasizing the existence of a “glass floor” for the French elites.
**This paper investigates the macroeconomic and asset pricing consequences of the upward trend in financial market participation observed in the U.S. since the late 1980s. In a limited participation two-agent Real Business Cycle model where stockholders feature external habit preferences, higher participation produces an increase in the average equity premium and in stock market volatility, while reducing the risk-free rate and the standard deviation of aggregate consumption. When coupled with a lower volatility of aggregate shocks, this mechanism helps rationalizing a period characterized by milder aggregate fluctuations but increased perceived risk in asset markets, such as the Great Moderation. I show that these results stem from a novel mechanism whereby an increase in the participation rate improves risk-sharing but raises the representative investor's average risk-aversion, with the latter channel dominating the former. Using household-level data on consumption from the U.S. Consumer Expenditure Survey for the sample 1984-2017, I show that the risk-aversion channel is consistent with the empirical evidence.