The debate over inequality has focused mainly on taxes, fairness and government. But two new academic papers shed light on one of the biggest drivers of wealth inequality—the higher investment returns of the wealthy. The growing wealth of the rich, and the relative stagnation of the middle class, are due in large part to diverging incomes, but investments also play an increasingly important role. And it's not just that the wealthy have more investments. They also have better-performing investments. Read More

In a paper on household wealth over the past decade, economist Edward Wolff at New York University found that wealth inequality rose sharply from 2007 to 2010 and has remained largely unchanged since then.

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One reason: The wealthiest 1 percent put three-quarters of their savings into investment assets. By contrast, the middle class had 63 percent of their assets tied up in their homes, with home equity accounting for about a third since they have large mortgage debt. Wolff found "striking differences in returns by wealth class." The top 1 percent earned an average annual return of 5.91 percent between 2010 and 2013—far more than the 3.27 percent earned by the middle three quartiles. And that was due mainly to having more exposure to the stock market. Read MoreInequality is world leaders' biggest worry: WEF

"The differences reflect the greater share of high-yield investment assets like stocks in the portfolios of the rich and the greater share of housing in the portfolio of the middle class," Wolff said. In an interview, Wolff also said that investments in private businesses and commercial real estate also boosted the returns of the rich. He said that while the middle class was largely divesting and selling investments between 2010 and 2013 (in part to pay down debts), the top 1 percent were growing or maintaining their investments. "If the middle class had been more heavily invested in financial assets they would have done better," he said. But stocks aren't the only fuel for the higher returns of the rich. Economists Emmanuel Saez and Gabriel Zucman looked at wealth inequality since 1913 and found wealth concentration has followed a "U-shaped evolution" over the past century.