I am most grateful to the editors of the British Journal of Sociology for putting together such a stimulating set of review essays about my book Capital and Ideology. I am very honored by the ...thoughtful articles written by such a distinguished group of scholars coming from sociology, history, political science, anthropology, geography, and economics. There is no way I can do justice to the richness of each review, and it is impossible to address all the stimulating points that they raise. I would like, however, to take this opportunity to briefly clarify a limited number of issues regarding what I have tried to achieve in this book and the many limitations behind such a project. In Capital and Ideology, I attempt to provide some elements for a global history of inequality regimes, that is, a history of the systems and institutions by which inequality is justified and structured, from premodern trifunctional and slave societies to modern postcolonial and hypercapitalist ones. One of main conclusions is that inequality is primarily political and ideological, rather than economic and technological. This is illustrated by the large diversity of sociohistorical trajectories which I uncover and analyze over time and across the five continents. I also stress that there exists a long‐run trend toward more equality, and attempt to draw lessons for the future. Obviously, such a global project is never ending. No book can exhaust so vast a subject. All my conclusions are tentative and fragile, by their very nature. They are based on research that needs to be supplemented and extended in the future. My objective is certainly not to close the subject but rather to help readers clarify their own ideas and their own ideologies of social equality and inequality and to stimulate further reflection on these issues.
Just like economists, voters have conflicting views about redistributive taxation because they estimate its incentive costs differently. We model rational agents as trying to learn from their ...dynastic income mobility experience the relative importance of effort and predetermined factors in the generation of income inequality and therefore the magnitude of these incentive costs. In the long run, “left-wing dynasties” believing less in individual effort and voting for more redistribution coexist with “right-wing dynasties.” This allows us to explain why individual mobility experience and not only current income matters for political attiitudes and how persistent differences in perceptions about social mobility can generate persistent differences in redistribution across countries.
The objective of this paper is to better understand the evolution and institutional roots of Hong Kong's growing economic inequality and political cleavages. By combining multiple sources of data ...(household surveys, fiscal data, wealth rankings, national accounts) and methodological innovations, two main findings are obtained. First, he evidence suggests a very large rise in income and wealth inequality in Hong Kong over the last four decades. Second, based on the latest opinion poll data, business elites, who carry disproportionate weight in Hong Kong's Legislative Council, are found to be more likely to vote for the pro-establishment camp (presumably to ensure that policies are passed that protect their political and economic interests). This paper argues that the unique alliance of government and business elites in a partially democratic political system is the plausible institutional root of Hong Kong's rising inequality and political cleavages.
This paper presents “Distributional National Accounts” (DINA) for France. That is, we combine national accounts, tax and survey data in a comprehensive and consistent manner to build homogenous ...annual series on the distribution of national income by percentiles over the 1900–2014 period, with detailed breakdown by age, gender and income categories over the 1970–2014 period. Our DINA-based estimates allow for a much richer analysis of the long-run pattern found in previous tax-based series, i.e. a long-run decline in income inequality, largely due to a sharp drop in the concentration of wealth and capital income following the 1914–1945 capital shocks. First, our new series deliver higher inequality levels than the usual tax-based series for the recent decades, because the latter miss a rising part of capital income. Growth incidence curves look dramatically different for the 1950–1983 and 1983–2014 sub-periods. We also show that gender inequality in labor income declined in recent decades, albeit fairly slowly among top labor incomes. E.g. female share among top 0.1% earners was only 12% in 2012 (vs. 7% in 1994 and 5% in 1970). Finally, we find that distributional changes can have large impact on comparisons of well-being across countries. E.g. average pretax income among bottom 50% adults is 20% larger in France than in the U.S., in spite of the fact that aggregate per adult national income is 30% smaller in France.
We combine household surveys and national accounts, as well as recently released tax data to track the dynamics of Indian income inequality from 1922 to 2015. According to our benchmark estimates, ...the top 1 percent of earners captured less than 21 percent of total income in the late 1930s, before dropping to 6 percent in the early 1980s and rising to 22 percent in the recent period. Our results appear to be robust to a range of alternative assumptions seeking to address numerous data limitations. These findings suggest that much more can be done to promote inclusive growth in India. We also stress the need for more transparency on income and wealth statistics, which is key to allow an informed democratic debate on inequality.
This paper derives optimal top tax rate formulas in a model where top earners respond to taxes through three channels: labor supply, tax avoidance, and compensation bargaining. The optimal top tax ...rate increases when there are zero-sum compensation-bargaining effects. We present empirical evidence consistent with bargaining effects. Top tax rate cuts are associated with top one percent pretax income shares increases but not higher economic growth. US CEO "pay for luck" is quantitatively more prevalent when top tax rates are low. International CEO pay levels are negatively correlated with top tax rates, even controlling for firms' characteristics and performance.
This paper combines national accounts, survey, wealth and fiscal data (including recently released tax data on high-income taxpayers) in order to provide consistent series on the accumulation and ...distribution of income and wealth in Russia from the Soviet period until the present day. We find that official survey-based measures vastly under-estimate the rise of inequality since 1990. According to our benchmark estimates, top income shares are now similar to (or higher than) the levels observed in the United States. We also find that inequality has increased substantially more in Russia than in China and other ex-communist countries in Eastern Europe. We relate this finding to the specific transition strategy followed in Russia. According to our benchmark estimates, the wealth held offshore by rich Russians is about three times larger than official net foreign reserves, and is comparable in magnitude to total household financial assets held in Russia.
We define generalized Pareto curves as the curve of inverted Pareto coefficients b(p), where b(p) is the ratio between average income above rank p and the p‐th quantile Q(p) (i.e., ...b(p)=EX|X>Q(p)/Q(p)). We use them to characterize income distributions. We develop a method to flexibly recover a continuous distribution based on tabulated income data as is generally available from tax authorities, which produces smooth and realistic shapes of generalized Pareto curves. Using detailed tabulations from quasi‐exhaustive tax data, we show the precision of our method. It gives better results than the most commonly used interpolation techniques for the top half of the distribution.
Abstract
Measuring and understanding the evolution of wealth inequality is a key challenge for researchers, policy makers, and the general public. This paper breaks new ground on this topic by ...presenting a new method to estimate and study wealth inequality. This method combines fiscal data with household surveys and national accounts in order to provide annual wealth distribution series, with detailed breakdowns by percentiles, age, and assets. Using the case of France as an illustration, we show that the resulting series can be used to better analyze the evolution and the determinants of wealth-inequality dynamics over the 1970–2014 period. We show that the decline in wealth inequality ends in the early 1980s, marking the beginning of a rise in the top 1% wealth share, though with significant fluctuations due largely to asset price movements. Rising inequality in savings rates coupled with highly stratified rates of returns has led to rising wealth concentration in spite of the opposing effect of house price increases. We develop a simple simulation model highlighting how changes in the combination of unequal savings rates, rates of return, and labor earnings that occurred in the early 1980s generated large multiplicative effects that led to radically different steady-state levels of wealth inequality. Taking advantage of the joint distribution of income and wealth, we show that top wealth holders are almost exclusively top capital earners, and increasingly fewer are made up of top labor earners; it has become increasingly difficult in recent decades to access top wealth groups with one's labor income only.
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