²¹The final line reports the variances estimated using income draws generated by the process assumed in Castaneda, Diaz-Gimenez, and Rios-Rull (2003), who were able to reproduce the skewness of the U.S. wealth distribution by reverse-engineering the income-process assumptions required to allow a Markov income process to generate the observed degree of wealth inequality. This process, too, bears little resemblance to the observable micro data on income dynamics.