Abstract

While many argue that high wealth concentration is associated with slow economic growth, this paper shows that this may depend on sources of wealth of the ultra rich. Using hand-collected data, I classify billionaires as heirs if they inherit corporate control from their family and founders if they are first-generation entrepreneurs. I find that one-standard-deviation increase in heirs’ (founders’) wealth/GDP correlates with 1.69% decline (2.36% increase) in total-factor-productivity growth over next five years. To alleviate endogeneity, I show that market indexes react positively around billionaires’ sudden deaths and that they react more strongly in countries with weaker institutions, indicating that billionaires generate spillovers and are more influential in these countries. I conclude that heir (founder) billionaires hinder (promote) economic productivity when institutions are weak, while both are results of creative destruction when institutions are strong.