About Capital in the Twenty-First Century

* Paris School of Economics, 48 boulevard Jourdan, 75014 Paris, France (e-mail: [email protected]). All statistical series and theoretical models used in this article and in my book are available in an online technical Appendix (http://piketty.pse.ens.fr/capital21c). Updated series are also available on the World Top Incomes Database (WTID) website (http//topincomes.parisschoolofeconomics.eu). † Go to http://dx.doi.org/10.1257/aer.p1060 to visit the article page for additional materials and author disclosure statement. In my view, Capital in the Twenty-First Century (Piketty 2014a) is primarily a book about the history of the distribution of income and wealth. Thanks to the cumulative efforts of several dozen scholars, we have been able to collect a relatively large historical database on the structure of national income and national wealth and the evolution of income and wealth distributions, covering three centuries and over 20 countries. My first objective in this book is to present this body of historical evidence, and to try to analyze the many economic, social, and political processes that can account for the various evolutions that we observe in the different countries since the Industrial Revolution. I stress from the beginning that we have too little historical data at our disposal to be able to draw definitive judgments. On the other hand, at least we have substantially more evidence than we used to. Imperfect as it is, I hope this work can contribute to put the study of distribution and of the long run back at the center of economic thinking. In this article, I present three key facts about inequality in the long run emerging from this research (see Figures 1–3 below; see also Piketty and Saez 2014) 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. I. What r > g Can and Cannot Explain