US rich get richer on stock market investments while modest investors are left behind

A factor they don't mention is that the rich are more likely to have insider information that allows them to make better decisions on when to buy & sell stock.

http://www.eurekalert.org/pub_releases/2014-06/icl-urg062614.php

PUBLIC RELEASE DATE: 26-Jun-2014
Contact: Maxine Myers
Imperial College London
US rich get richer on stock market investments while modest investors are left behind

In a new study, researchers from Imperial College Business School, Columbia University and the University of Maryland found that wealthy individuals in the US can get in relative terms up to 70 per cent times greater returns on their investments than those with modest wealth, when the yields on assets such as stocks and bonds are calculated. The team say that this further widens the income gap between rich and poor and potentially creates disparities in society.

Income inequality in the US has been steadily rising. According to a report by Oxfam International released earlier this year, the wealthiest one per cent has captured 95 per cent of post-financial crisis growth since 2009, while the bottom 90 per cent became poorer in the US.

The research is the first to offer a consistent explanation of income inequality generated from financial markets.

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