In this article, I present three key facts about income and wealth inequality in the long run emerging from my book Capital in the Twenty-First Century and seek to sharpen and refocus the discussion ...about those trends. In particular, I clarify the role played by r > g in my analysis of wealth inequality. I also discuss some of the implications for optimal taxation, and the relation between capital-income ratios and capital shares.
This article attempts to document and account for the long-run evolution of inheritance. We find that in a country like France the annual flow of inheritance was about 20—25% of national income ...between 1820 and 1910, down to less than 5% in 1950, and back up to about 15% by 2010. A simple theoretical model of wealth accumulation, growth, and inheritance can fully account for the observed U-shaped pattern and levels. Using this model, we find that under plausible assumptions the annual bequest flow might reach about 20—25% of national income by 2050. This corresponds to a capitalized bequest share in total wealth accumulation well above 100%. Our findings illustrate the fact that when the growth rate g is small, and when the rate of return to private wealth r is permanently and substantially larger than the growth rate (say, r = 4—5% versus g = 1—2%), which was the case in the nineteenth century and early twentieth century and is likely to happen again in the twenty-first century, then past wealth and inheritance are bound to play a key role for aggregate wealth accumulation and the structure of lifetime inequality. Contrary to a widespread view, modern economic growth did not kill inheritance.
CAPITAL IS BACK Piketty, Thomas; Zucman, Gabriel
The Quarterly journal of economics,
08/2014, Letnik:
129, Številka:
3
Journal Article
Recenzirano
Odprti dostop
How do aggregate wealth-to-income ratios evolve in the long run and why? We address this question using 1970–2010 national balance sheets recently compiled in the top eight developed economies. For ...the United States, United Kingdom, Germany, and France, we are able to extend our analysis as far back as 1700. We find in every country a gradual rise‘ of wealth-income ratios in recent decades, from about 200–300% in 1970 to 400–600% in 2010. In effect, today’s ratios appear to be returning to the high values observed in Europe in the eighteenth and nineteenth centuries (600–700%). This can be explained by a long-run asset price recovery (itself driven by changes in capital policies since the world wars) and by the slowdown of productivity and population growth, in line with the
β
=
s
g
Harrod-Domar-Solow formula. That is, for a given net saving rate s=10%, the long-run wealth-income ratio β is about 300% if g=3% and 600% if g=1.5%. Our results have implications for capital taxation and regulation and shed new light on the changing nature of wealth, the shape of the production function, and the rise of capital shares.
Inequality in the long run Piketty, Thomas; Saez, Emmanuel
Science (American Association for the Advancement of Science),
05/2014, Letnik:
344, Številka:
6186
Journal Article
Recenzirano
This Review presents basic facts regarding the long-run evolution of income and wealth inequality in Europe and the United States. Income and wealth inequality was very high a century ago, ...particularly in Europe, but dropped dramatically in the first half of the 20th century. Income inequality has surged back in the United States since the 1970s so that the United States is much more unequal than Europe today. We discuss possible interpretations and lessons for the future.
We combine national accounts, surveys, and new tax data to study the accumulation and distribution of income and wealth in China from 1978 to 2015. The national wealth-income ratio increased from 350 ...percent in 1978 to 700 percent in 2015, while the share of public property in national wealth declined from 70 percent to 30 percent. We provide sharp upward revision of official inequality estimates. The top 10 percent income share rose from 27 percent to 41 percent between 1978 and 2015; the bottom 50 percent share dropped from 27 percent to 15 percent. China’s inequality levels used to be close to Nordic countries and are now approaching US levels.
This paper presents new findings on global inequality dynamics from the World Wealth and Income Database (WID.world), with particular emphasis on the contrast between the trends observed in the ...United States, China, France, and the United Kingdom. We observe rising top income and wealth shares in nearly all countries in recent decades. But the magnitude of the increase varies substantially, thereby suggesting that different country-specific policies and institutions matter considerably. Long-run wealth inequality dynamics appear to be highly unstable. We stress the need for more democratic transparency on income and wealth dynamics and better access to administrative and financial data.
This paper presents new findings from the World Top Incomes Database and discusses some of their policy implications. In particular, the paper provides updated top income series for the United ...States—including new estimates through 2010, showing a strong rebound of the top 1 percent income share, following the 2008-09 sharp fall. It also presents updated income series for other developed countries (including the United Kingdom, France, Germany, and Japan) and new series on wealth-income ratios. In light of this extended set of country series, the paper analyzes the relative importance of market and institutional forces in explaining observed cross-country trends, and the likely impact of the Great recession on these long-term evolutions. It discusses the policy implications of the findings, both in terms of optimal tax policy and regarding the interplay between inequality and macroeconomic fragility.
Top Incomes in the Long Run of History Atkinson, Anthony B.; Piketty, Thomas; Saez, Emmanuel
Journal of economic literature,
03/2011, Letnik:
49, Številka:
1
Journal Article
Recenzirano
Odprti dostop
A recent literature has constructed top income shares time series over the long run for more than twenty countries using income tax statistics. Top incomes represent a small share of the population ...but a very significant share of total income and total taxes paid. Hence, aggregate economic growth per capita and Gini inequality indexes are sensitive to excluding or including top incomes. We discuss the estimation methods and issues that arise when constructing top income share series, including income definition and comparability over time and across countries, tax avoidance, and tax evasion. We provide a summary of the key empirical findings. Most countries experience a dramatic drop in top income shares in the first part of the twentieth century in general due to shocks to top capital incomes during the wars and depression shocks. Top income shares do not recover in the immediate postwar decades. However, over the last thirty years, top income shares have increased substantially in English speaking countries and in India and China but not in continental European countries or Japan. This increase is due in part to an unprecedented surge in top wage incomes. As a result, wage income comprises a larger fraction of top incomes than in the past. Finally, we discuss the theoretical and empirical models that have been proposed to account for the facts and the main questions that remain open.
I am most grateful to the editors of Œconomia – History / Methodology / Philosophy for putting together such a stimulating set of review essays about my book Capital and Ideology. 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 briefly to clarify a limited number of issues regarding what I have tried to achieve in this book and the many limitations behin...
30 Jahre nach der Deutschen Wiedervereinigung – und unter dem Eindruck der akuten Corona-Krise – fand der siebte New Paradigm Workshop des Forum New Economy zur Zukunft des deutschen Modells vom 28. ...bis 30. September in Berlin statt. Renommierte deutsche und internationale Experten diskutierten die „Zukunft des deutschen Wirtschaftsmodells”. Wie gut ist Deutschland noch auf die kommenden Herausforderungen vorbereitet? In diesem Zeitgespräch sollen die auf dem Workshop präsentierten Studien vorgestellt werden, die mit Unterstützung des Forum New Economy erstellten wurden, unter anderem zur Entwicklung der Ungleichheit in Deutschland, einer neuen Industriepolitik, der Relevanz fiskalpolitischer Regeln und den Tücken des deutschen Exportmodells. Ergänzt werden diese Beiträge durch eine Übersetzung des Konferenzbeitrags von Thomas Piketty.
Thirty years after German reunification – and under distress due to the acute coronavirus crisis – the seventh New Paradigm Workshop of the Forum New Economy took place in Berlin on 28-30 September. Renowned German and international experts discussed the “Future of the German Economic Model”. How well is Germany prepared for the coming challenges? This forum features a selection of articles funded by the Forum New Economy and presented at its workshop, including studies on the development of inequality in Germany, new industrial policy, the relevance of fiscal rules and the pitfalls of the German export model. The forum also includes a translation of the keynote by Thomas Piketty.
PDF
