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  5. Pareto and Piketty: The Macroeconomics of Top Income and Wealth Inequality

Pareto and Piketty: The Macroeconomics of Top Income and Wealth Inequality

  • Charles I. Jones
Journal of Economic Perspectives
vol. 29, no. 1, Winter 2015
(pp. 29-46)
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Abstract

Since the early 2000s, research by Thomas Piketty, Emmanuel Saez, and their coauthors has revolutionized our understanding of income and wealth inequality. In this paper, I highlight some of the key empirical facts from this research and comment on how they relate to macroeconomics and to economic theory more generally. One of the key links between data and theory is the Pareto distribution. The paper describes simple mechanisms that give rise to Pareto distributions for income and wealth and considers the economic forces that influence top inequality over time and across countries. For example, it is in this context that the role of the famous r - g expression is best understood.

Citation

Jones, Charles I. 2015. "Pareto and Piketty: The Macroeconomics of Top Income and Wealth Inequality." Journal of Economic Perspectives, 29 (1): 29-46. DOI: 10.1257/jep.29.1.29

Additional Materials

JEL Classification

  • C46 Specific Distributions; Specific Statistics
  • D31 Personal Income, Wealth, and Their Distributions
  • D63 Equity, Justice, Inequality, and Other Normative Criteria and Measurement
  • P16 Capitalist Systems: Political Economy
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