This paper examines how expanding private capital markets contribute to rising economic inequalities in the U.S. We show that the share of early-stage financing raised from U.S. high-net-worth individuals tripled from 2004 to 2022. Exploiting the expansion of the QSBS tax exclusion, we find that HNWIs’ investments made startups 5.6% more likely to stay private. Counterfactual simulations reveal that HNWIs’ excess returns on early-stage investments explain 26% of the growth in the top 0.5% wealth share over 2010-2022. Finally, investor entry increased incumbents’ returns and encouraged further investments, generating a self-reinforcing feedback loop between private capital market growth and inequality.
Ararat Gocmen
Ph.D. Candidate
Department of Economics
University College London
ararat.gocmen.19@ucl.ac.uk
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Hello! I am a Ph.D. candidate in Economics at University College London.
I study labor and financial economics, specializing in migration economics and entrepreneurial finance.
I am especially interested in how labor and capital markets interact with each other and the implications for inequality.
At UCL, I serve as a Research Officer at the Centre for Research and Analysis of Migration
and a PhD Scholar at the James M. and Cathleen D. Stone Centre on Wealth Concentration, Inequality, and the Economy.
I am also a Research Fellow at the ROCKWOOL Foundation Berlin – Institute for the Economy and the Future of Work.
I hold an AB in History from Princeton University and, as a Marshall Scholar, earned an MSc in Economics from UCL and an MA in Intellectual History and Political Thought jointly from QMUL and UCL.
Previously, I worked for BlackRock's Portfolio Analytics Group in New York.
Working Papers
Private Capital Markets and Inequality - Submittedwith Clara Martínez-Toledano (Imperial) and Vrinda Mittal (UNC-Chapel Hill)
Draft
Presented at the NBER Summer Institute 2025 Household Finance and the NBER Public Economics Program Meeting Fall 2025.
Winner of the IIPF Peggy and Richard Musgrave Prize.
Works in Progress
Immigration and Firm Investment - Job Market PaperImmigration and Labor Market Tightness
with Thomas Cornelissen (Essex), Christian Dustmann (UCL), and Uta Schönberg (HKU)