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

33 Pages Posted: 15 Dec 2014

See all articles by Charles I. Jones

Charles I. Jones

Stanford Graduate School of Business; National Bureau of Economic Research (NBER)

Date Written: December 2014

Abstract

Since the early 2000s, research by Thomas Piketty, Emmanuel Saez, and their coathors 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.

Suggested Citation

Jones, Charles I., Pareto and Piketty: The Macroeconomics of Top Income and Wealth Inequality (December 2014). NBER Working Paper No. w20742. Available at SSRN: https://ssrn.com/abstract=2538328

Charles I. Jones (Contact Author)

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