Is inequality increasing in r-g? Piketty’s principle of capitalist economics and the dynamics of inequality in Britain, 1210-2013

Jakob Madsen

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: In his 2014 book, Thomas Piketty argues that wealth inequality is sharply increasing in r-g and refers to r>g as ‘the central contradiction of capitalist economics’, where r is asset returns and g is real income growth. To assess whether inequality is increasing in the (r-g)-gap this paper: 1) constructs unique annual data on asset returns for a balanced portfolio and several other variables for Britain over the period 1210-2013, and 2) examines whether the dynamics in the wealth-income ratio, W-Y, and capital’s income share, SW, are governed by (r-g). It is shown that r and g are robust and significant determinants of wealth and income inequality and that they have been the major forces behind the large inequality waves over the past eight centuries.

Keywords: Inequality and the (r-g)-gap; dynamics of inequality; inequality in Britain, 1210-2013 (search for similar items in EconPapers)
JEL-codes: E1 E2 N1 N30 O4 P1 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2017-10
New Economics Papers: this item is included in nep-gro, nep-his, nep-hpe and nep-mac
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://cama.crawford.anu.edu.au/sites/default/fil ... 0/63_2017_madsen.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2017-63

Access Statistics for this paper

More papers in CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University Contact information at EDIRC.
Bibliographic data for series maintained by Cama Admin (cama.admin@anu.edu.au).