Very recently, Thomas Piketty's new book, Capital in the Twenty-First Century, has been widely commented and has elicited a lot of reactions. Particularly in the United States. The theory (of inequality due to capital accumulation) advanced by the author is that the returns on invested capital (r) rises faster than economic growth (g) and written in the (already famous) formulation r>g, in the context of rising proportion of capital incomes in the total income and of capital incomes being more unequally distributed than labor incomes. This mechanism creates an ever-increasing trend of income inequality, particularly found among the top 1%, although the evidence for diminishing return of capital accumulation, powerful enough that further capital accumulation will cause a decline in net capital income rather than an expansion, considerably weakens this claim (Rognlie,
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A growth in inequality along with financial…
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Very recently, Thomas Piketty's new book, Capital in the Twenty-First Century, has been widely commented and has elicited a lot of reactions. Particularly in the United States. The theory (of inequality due to capital accumulation) advanced by the author is that the returns on invested capital (r) rises faster than economic growth (g) and written in the (already famous) formulation r>g, in the context of rising proportion of capital incomes in the total income and of capital incomes being more unequally distributed than labor incomes. This mechanism creates an ever-increasing trend of income inequality, particularly found among the top 1%, although the evidence for diminishing return of capital accumulation, powerful enough that further capital accumulation will cause a decline in net capital income rather than an expansion, considerably weakens this claim (Rognlie,