Showing papers by "Thomas Piketty published in 2017"

Capital Accumulation, Private Property and Rising Inequality in China, 1978-2015

Abstract: 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 China over the 1978 2015 period. We find that the aggregate national wealth - income ratio has increased from 350% in 1978 to 700% in 2015. This can be accounted for by a combination of high saving and investment rates and a gradual rise in relative asset prices, reflecting changes in the legal system of property. The share of public property in national wealth has declined from about 70% in 1978 to 30% in 2015, which is still a lot higher than in rich countries (close to 0% or negative). Next, we provide sharp upward revision of official inequality estimates. The top 10% income share rose from 27% to 41% of national income between 1978 and 2015, while the bottom 50% shar e dropped from 27% to 15%. China's inequality levels used to be close to Nordic countries and are now approaching U.S. levels.

Global Inequality Dynamics: New Findings from WID.world

Abstract: 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.

Global Inequality Dynamics: New Findings from WID.world

Abstract: 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.

Indian income inequality, 1922-2015 From British Raj to Billionaire Raj ?

Abstract: We combine household surveys and national accounts, as well as recently released tax data in a systematic way to track the dynamics of Indian income inequality from 1922 to 2015. According to our benchmark estimates, the share of national income accruing to the top 1% is at its highest since the creation of the Indian Income tax act in 1922. The top 1% of earners captured less than 21% of total income in the late 1930s, before dropping to 6% in the early 1980s and rising to 22% in the recent period. Over the 1951-1980 period, the bottom 50% group captured 28% of total growth and incomes of this group grew faster than the average, while the top 0.1% incomes decreased. Over the 1980 -2015 period, the situation was reversed; the top 0.1% of earners captured a higher share of total growth than the bottom 50% (12% vs. 11%), while the top 1% received a higher share of total growth than the middle 40% (29% vs. 23%). These findings suggest that much can be done to promote more inclusive growth in India. Our results also appear to be robust to a range of alternative assumptions seeking to address numerous data limitations. Most importantly, we stress the need for more democratic transparency on income and wealth statistics to avoid another "black decade" similar to the 2000s, during which India entered the digital age but stopped publishing tax statistics. Such data sources are key to track the long run evolution of inequality and to allow an informed democratic debate on inequality.

Income Inequality in France, 1900-2014: Evidence from Distributional National Accounts (DINA)

Abstract: 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 it has become increasingly difficult in recent decades to access top wealth groups with labor income only. Next, 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 pre-tax income among bottom 50% adults is 30% larger in France than in the U.S., in spite of the fact that aggregate per adult national income is 30% smaller in France.

Appendix to "From Soviets to Oligarchs: Inequality and Property in Russia, 1905-2016"

Abstract: This appendix supplements our paper and describes the full set of data files and computer codes (NPZ 2017.zip) that were used to construct the series.

On the Share of Inheritance in Aggregate Wealth: Europe and the USA, 1900–2010

Abstract: This paper provides historical series on the evolution of the share of inherited wealth in aggregate private wealth in Europe (France, the UK, Germany, Sweden) and the USA over the 1900–2010 period. Until 1910, the inheritance share was very high in Europe (70–80%). It then fell abruptly following the 1914–45 shocks, down to about 30–40% during the 1950–80 period, and is back to 50–60% (and rising) since around 2010. The US pattern also appears to be U-shaped, albeit less marked, and with significant uncertainty regarding recent trends, due to data limitations. We discuss possible interpretations for these long-run patterns.

Indian income inequality, 1922-2014: From British Raj to Billionaire Raj ?

Abstract: We combine household surveys and national accounts, as well as recently released tax data in a systematic way to track the dynamics of Indian income inequality from 1922 to 2014. According to our benchmark estimates, the share of national income accruing to the top 1% income earners is now at its highest level since the creation of the Indian Income tax in 1922. The top 1% of earners captured less than 21% of total income in the late 1930s, before dropping to 6% in the early 1980s and rising to 22% today. Over the 1951-1980 period, the bottom 50% group captured 28% of total growth and incomes of this group grew faster than the average, while the top 0.1% incomes decreased. Over the 1980-2014 period, the situation was reversed; the top 0.1% of earners captured a higher share of total growth than the bottom 50% (12% vs. 11%), while the top 1% received a higher share of total growth than the middle 40% (29% vs. 23%). These findings suggest that much can be done to promote more inclusive growth in India. Our results also appear to be robust to a range of alternative assumptions seeking to address data limitations. Most importantly, we stress the need for more democratic transparency on income and wealth statistics to avoid another "black decade" similar to the 2000s, during which India entered the digital age but stopped publishing tax statistics. Such data sources are key to track the long run evolution of inequality and to allow an informed democratic debate on inequality.

Measuring lnequality in the Middle East 1990-2016: The World’s Most Unequal Region?

Abstract: In this paper we combine household surveys, national accounts, income tax data and wealth data in order to estimate income concentration in the Middle East for the period 1990-2016. According to our benchmark series, the Middle East appears to be the most unequal region in the world, with a top decile income share as large as 64%, as compared to 37% in Western Europe, 47% in the USA and 55% in Brazil. This is due both to enormous inequality between countries (particularly between oil-rich and population-rich countries) and to large inequality within countries (which we probably under-estimate, given the limited access to proper fiscal data). We stress the importance of increasing transparency on income and wealth in the Middle East, as well as the need to develop mechanisms of regional redistribution and investment.

On the Share of Inheritance in Aggregate Wealth: Europe and the USA, 1900–2010

Abstract: This paper provides historical series on the evolution of the share of inherited wealth in aggregate private wealth in Europe (France, the UK, Germany, Sweden) and the USA over the 1900–2010 period. Until 1910, the inheritance share was very high in Europe (70–80%). It then fell abruptly following the 1914–45 shocks, down to about 30–40% during the 1950–80 period, and is back to 50–60% (and rising) since around 2010. The US pattern also appears to be U-shaped, albeit less marked, and with significant uncertainty regarding recent trends, due to data limitations. We discuss possible interpretations for these long-run patterns.

The elephant curve of global inequality and growth

Abstract: The dynamics of global inequality have attracted growing attention in recent years. However, we still know relatively little about how the distribution of global income is evolving. Income inequality is increasing in many countries, but large emerging countries like India and China are catching up and might drive global inequality down. Recent studies of global inequality combine household surveys and provide valuable estimates (Lakner and Milanovic 2016, Liberati 2015, Ortiz and Cummins 2011). Surveys, however, are not uniform across countries, they cannot capture top incomes well, and are not consistent with macroeconomic totals. In this paper, we report on new estimates of global inequality presented in the World Inequality Report 2018 (Alvaredo et al., 2018). These estimates are based on recent, homogeneous inequality statistics produced for a number of countries in the World and Wealth Income Database (WID.world). We find that the global top 1% has captured twice as much total growth than the global bottom 50% between 1980 and 2016. We also analyze different projected trajectories for global inequality in the coming decades.

Generalized Pareto Curves: Theory and Applications

Abstract: We define generalized Pareto curves as the curve of inverted Pareto coefficients b(p), where b(p) is the ratio between average income or wealth above rank p and the p-th quantile Q(p) (i.e. b(p) = E[X|X > Q(p)]/Q(p)). We use them to characterize entire distributions, including places like the top where power laws are a good description, and places further down where they are not. We develop a method to nonparametrically recover the entire distribution based on tabulated income or wealth 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 demonstrate the precision of our method both empirically and analytically. It gives better results than the most commonly used interpolation techniques. Finally, we use Pareto curves to identify recurring distributional patterns, and connect those findings to the existing literature that explains observed distributions by random growth models.

Pour un traité de démocratisation de l'Europe

Abstract: Comment contenir le deferlement de la vague populiste qui risque de balayer nos democraties ? Comment prevenir l’eclatement de l’Union europeenne ? Pour en finir avec des politiques economiques disqualifiees, mettre l’austerite en minorite et lutter contre les inegalites, il est urgent de democratiser le gouvernement de la zone euro. Redige par une equipe pluridisciplinaire de juristes, politistes et economistes, repris par Benoit Hamon, le projet de traite, ici presente et commente, institue une Assemblee parlementaire de la zone euro permettant de promouvoir la justice fiscale et sociale. Le traite peut etre adopte en l’etat par les pays qui s’y rallieront. Le texte est precede d’une introduction qui expose sa mise en œuvre de facon pedagogique. L’objectif est que chaque citoyen s’empare du debat europeen et que les differentes forces sociales et politiques contribuent a ameliorer ce projet et a nous sortir de la sinistrose ambiante.

Generalized Pareto Curves: Theory and Applications

Abstract: We define generalized Pareto curves as the curve of inverted Pareto coefficients b(p), where b(p) is the ratio between average income or wealth above rank p and the p-th quantile Q(p) (i.e. b(p) = E[X|X > Q(p)]/Q(p)). We use them to characterize entire distributions, including places like the top where power laws are a good description, and places further down where they are not. We develop a method to nonparametrically recover the entire distribution based on tabulated income or wealth 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 demonstrate the precision of our method both empirically and analytically. It gives better results than the most commonly used interpolation techniques. Finally, we use Pareto curves to identify recurring distributional patterns, and connect those findings to the existing literature that explains observed distributions by random growth models.

Tony Atkinson and his Legacy

Abstract: Tony Atkinson is universally celebrated for his outstanding contributions to the measurement and analysis of inequality, but he never saw the study of inequality as a separate branch of economics. He was an economist in the classical sense, rejecting any sub-field labelling of his interests and expertise, and he made contributions right across economics. His death on 1 January 2017 deprived the world of both an intellectual giant and a deeply committed public servant in the broadest sense of the term. This collective tribute highlights the range, depth and importance of Tony's enormous legacy, the product of almost fifty years’ work.

Accounting for Wealth Inequality Dynamics: Methods, Estimates and Simulations for France (1800-2014)

Abstract: This paper combines different sources and methods (income tax data, inheritance registers, national accounts, wealth surveys) in order to deliver consistent, unified wealth distribution series for France over the 1800-2014 period. We find a large decline of the top 10% wealth share from the 1910s to the 1980s, mostly to the benefit of the middle 40% of the distribution. Since the 1980s-90s, we observe a moderate rise of wealth concentration, with large fluctuations due to asset price movements. In effect, rising inequality in saving rates and rates of return pushes toward rising wealth concentration, in spite of the contradictory effect of housing prices. We develop a simple simulation model highlighting how the combination of unequal saving rates, rates of return and labor earnings leads to large multiplicative effects and high steady-state wealth concentration. Small changes in the key parameters appear to matter a lot for long-run inequality. We discuss the conditions under which rising concentration is likely to continue in the coming decades.

From Soviets to Oligarchs: Inequality and Property in Russia 1905-2016

Abstract: 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.

Tony Atkinson and his Legacy

Abstract: Tony Atkinson is universally celebrated for his outstanding contributions to the measurement and analysis of inequality, but he never saw the study of inequality as a separate branch of economics. He was an economist in the classical sense, rejecting any sub-field labelling of his interests and expertise, and he made contributions right across economics. His death on 1 January 2017 deprived the world of both an intellectual giant and a deeply committed public servant in the broadest sense of the term. This collective tribute highlights the range, depth and importance of Tony’s enormous legacy, the product of over fifty years’ work.

From Soviets to Oligarchs: Inequality and Property in Russia, 1905-2016

Abstract: 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.

Appendix to "Capital Accumulation, Private Property and Rising Inequality in China, 1978-2015"

Abstract: This appendix supplements our paper and describes the full set of data files and computer codes (PYZ2017.zip) that were used to construct the series.

Appendix to "Measuring Inequality in the Middle East 1990-2016: The World's Most Unequal Region?"

Abstract: This appendix supplements our paper and describes the full set of data files and computer codes (AAP2017.zip) that were used to construct the series. The zip file AAP2017.zip includes the following files (in addition to the pdf files of the main paper and present appendix): - AAP2017MainFiguresTables.xlsx : figures and tables presented in the main paper - AAP2017MainFiguresTables_NoLinks.xlsx : figures and tables presented in the main paper without outside links to other files - AAP2017Appendix.xlsx : figures and tables presented in the appendix - AAP2017Appendix_NoLinks.xlsx.xlsx : figures and tables presented in the appendix without outside links to other files