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Capital in The Twenty-First Century

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... This includes models with stochastic returns or discount rates (Krusell and Smith (1998), Zhu (2011, 2015)) and models with explosive growth coupled with a birth and death process (Wold and Whittle (1957), Steindl (1965), Benhabib and Bisin (2007), Jones (2015), Sargent, Wang, and Yang (2021)). 6 Also the argument of Piketty (2014Piketty ( , 2015 that top wealth inequality depends on "r − g" highlights precisely this nexus. In our baseline model, automation has important distributional consequences because it raises the return to wealth. ...
... This includes models with stochastic returns or discount rates (Krusell and Smith (1998), Zhu (2011, 2015)) and models with explosive growth coupled with a birth and death process (Wold and Whittle (1957), Steindl (1965), Benhabib and Bisin (2007), Jones (2015), Sargent, Wang, and Yang (2021)). 6 Also the argument of Piketty (2014Piketty ( , 2015 that top wealth inequality depends on "r − g" highlights precisely this nexus. In our baseline model, automation has important distributional consequences because it raises the return to wealth. ...
... This new channel differs from the common argument that a rise in the capital share leads to higher inequality because capital income is more unequally distributed than labor income(Meade (1964),Piketty (2014)). As we discuss in detail, such compositional effects are small relative to the data and to the changes in capital ownership generated by our model.6 ...
Article
The benefits of new technologies accrue not only to high‐skilled labor but also to owners of capital in the form of higher capital incomes. This increases inequality. To make this argument, we develop a tractable theory that links technology to the distribution of income and wealth—and not just that of wages—and use it to study the distributional effects of automation. We isolate a new theoretical mechanism: automation increases inequality by raising returns to wealth. The flip side of such return movements is that automation can lead to stagnant wages and, therefore, stagnant incomes at the bottom of the distribution. We use a multiasset model extension to confront differing empirical trends in returns to productive and safe assets and show that the relevant return measures have increased over time. Automation can account for part of the observed trends in income and wealth inequality.
... One crucial factor determining power and status in societies is access to economic resources. Income distribution is a theme that has gained increased interest in recent years, exemplified by the studies of Piketty (2014) and Atkinson (2016). Worries about increasing differences are now heightened, and differential access to economic resources has been identified as one of the significant problems in the world. ...
... Sweden has for a long time been considered an egalitarian society with minor economic differences. However, this characterization is not self-evident anymore, as demonstrated in several studies (Almqvist 2016;Roine and Waldenström 2008, 2014Waldenström 2016). Björklund and Jäntti (2011) show that income inequality in Sweden, based on disposable equalized income, had increased in recent decades from the early 1980s when incomes were reasonably compressed. ...
... Another critical factor is the increasing share of disposable income that comes from capital. We have already referred to the studies showing this at the national level in Sweden and other countries (Piketty 2014;Björklund and Jäntti 2011). This is probably an essential part of the change. ...
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In the present report, we investigate the patterns and trends of inequality in disposable income in the working-age population in Swedish municipalities 1986-2013. This period coincided with when Sweden changed from very low levels of inequality to one with substantially increasing inequality. Incomes has increased in all parts of Sweden, but differences in incomes between municipalities have widened. As a result, large parts of Sweden have become poorer in a relative, although not in a nominative sense. At the same time, income inequality has increased substantially within as well as between unicipalities. Present-day Swedes live in much more unequal environments, both at the national level and in the municipalities. The large city areas, or at least part of them, have had a much more advantageous economic development, but they also became more unequal. We see a division between parts of Sweden; there are clear differentiation tendencies between urban and rural parts, centre and periphery. Another finding is that the relation between mean income and income inequality has changed from the 1980s to the present. This association was negative a couple of decades ago, meaning that inequality was somewhat higher in poorer municipalities. From the 1990s onwards, the association is instead positive – affluent municipalities are more unequal.
... Neolítico, 5.000-3.000 a.c., Kohler et al., 2017); y la revolución industrial junto con la lógica colonial de saqueo masivo de los recursos naturales de América y África en el s.XVI, (Piketty, 2014). Los niveles extremos de desigualdad económica resultantes del s.XVI descendieron drásticamente a principios del s. ...
... Los niveles extremos de desigualdad económica resultantes del s.XVI descendieron drásticamente a principios del s. XX, principalmente como consecuencia de la destrucción masiva de recursos debido a las dos guerras mundiales y a la crisis económica de 1929 (Piketty, 2014). Durante las décadas posteriores estos bajos niveles de desigualdad se mantuvieron más o menos estables debido principalmente a unas políticas fiscales con altas tasas impositivas a los más ricos (Piketty, 2014). ...
... XX, principalmente como consecuencia de la destrucción masiva de recursos debido a las dos guerras mundiales y a la crisis económica de 1929 (Piketty, 2014). Durante las décadas posteriores estos bajos niveles de desigualdad se mantuvieron más o menos estables debido principalmente a unas políticas fiscales con altas tasas impositivas a los más ricos (Piketty, 2014). No es hasta la década de los ochenta cuando la creciente desregularización de los mercados propiciará un gran aumento de la desigualdad económica hasta llegar a los altos niveles en los que hoy día nos encontramos (Alvaredo, Chancel, Piketty, Saez, y Zucman, 2018; Piketty, 2014). ...
Article
La realidad económica es un elemento esencial de la vida de las personas por lo que entender cómo nos afecta psicológica y culturalmente es fundamental. Basándonos en la perspectiva ecocultural, enraizada en el materialismo histórico y el interaccionismo simbólico, en este trabajo llevamos a cabo una integración teórica en la que exponemos cómo la activad económica afecta a la realidad cultural y psicológica de las personas. En concreto, nos hemos centrado en analizar separadamente cómo las distintas fases de la actividad económica —producción, distribución y consumo— fomentan diversas dinámicas individualistas-colectivistas. Esta integración teórica pretende subrayar la importancia de analizar los factores macrosociales con el objetivo de conseguir una compresión más integral de la realidad humana.
... The strong concentration of wealth is a characteristic of many capitalist democracies. Since Piketty's groundbreaking work Capital in the twenty-first century (Piketty, 2014), a spike in scholarship has addressed how wealth concentration has developed over time and why it has taken off rapidly in many countries around the globe (e.g. Piketty, 2020;Zucman, 2019). ...
... Social scientists have provided several explanations for the rise of wealth inequality. In Piketty's seminal account, the rate of return on private capital usually exceeds the rate of economic growth (r > g) throughout history, by which wealth of the rich tends to grow faster than the economy, and those with no or few assets fall behind (Piketty, 2014). In the following, we outline additional political, socio-economic, institutional and cultural changes that have facilitated or contributed to the rise in wealth inequality. ...
... Second, given the weight of the past of wealth accumulation (Piketty, 2014;Savage, 2021), it is evident that countries and individuals in the Global North have profited massively from colonial exploitation, or-in the case of Germany-from collaborating with the Nazi regime in various ways (see e.g. Albers et al., 2020;Bajohr, 2002), and that these fortunes persist today. ...
Article
This special issue addresses the question of why high levels of wealth inequality in many countries are not met with greater public discontent and demand for redistribution. The introduction contextualizes this focus by providing an overview on the social science literature explaining the patterns and drivers of wealth inequality in capitalist societies in the post-war era. The contributions enhance the understanding of why wealth inequality remains largely unchallenged by the public in the following ways: (a) through shedding light on the perceptions of different groups and asking how they perceive wealth inequality and the wealthy; (b) by asking why the non-wealthy seldom oppose wealth inequality; and (c) by reconstructing how political and economic elites conceive of wealth-related policies, such as wealth taxes. Future avenues for research, especially regarding the legitimation of wealth and the elaboration of a relational perspective, are outlined.
... Inequality has been rising since the middle of the 20 th century in many countries (Piketty, 2014): in the 2000s the share of the richest 1% in the OECD countries has risen to around 10-15% or 10-15 times their share of the population. Inequality is a multidimensional phenomenon involving income, wealth, education and healththe rise in inequality is obvious, yet the reasons are still discussed, with institutions being one of the most often mentioned drivers of inequality. ...
... Bearing in mind the criticism by other researchers (see Barro, 2000), such a relationship should not be considered as a regularity or a universal one, yet, it was the first step towards highlighting the role of institutions. Moreover, Piketty (2014) postulates an inverse U-shape relation, observed in the 20 th century. It follows, that according to the initial concept, during industrialization an income differential between rural and urbanized areas rises and consequently, following urbanization, the gap decreases. ...
Conference Paper
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Since economic policy has changed its direction and course of action, from the functioning of market mechanisms and rules to the introduction of regulatory policy, discretion and the state as the main carrier of economic policy, various economic and development schools have been developed and changed. The turning point in the functioning of economic policy as well as the replacement of economic schools was mainly related to the appearance of various economic crises that have affected economic development. Thus, the appearance of the recent economic crisis again revived the important role of the state and regulatory policy in the implementation of economic policy. The basis of economic policy is becoming a fiscal policy and its instruments that affect economic development. Special attention is dedicated to changes in fiscal indicators, public debt and budget deficit. No less important are monetary indicators that are also taken into account, with regard to price stability and exchange rate fluctuations. Also, relations with foreign countries, i.e. payments and trade balances must be taken into account when discussing about economic policy. On the other side, a responsible economic policy needs to achieve certain goals and economic development. For indicators of economic development were used indicators of economic growth, changes in GDP and GDP per capita, unemployment rate and the Human Development Index as a wider measure of sustainable development. Using the multivariate linear regression, the effect of economic policy on the indicators of economic development is determined. In this way, the relationship between the indicators of economic policy and economic development in the Republic of Serbia in the period 2008-2016 is examined, with special emphasis on the economic crisis and the economic policy after it. The paper also presents the importance of conducting a responsible economic policy in order to bring the observed indicators to acceptable reference values. The aim of the research is to demonstrate the effect of economic policy on overcoming the negative impact of the global economic crisis in Serbia and creating economic development, where key elements of fiscal and monetary policy measures taken as well as foreign operations and their direct linkage and activity to indicators of economic development. Unlike the indicators in which a positive change is observed from year to year in the observed period, such as a fall in inflation and an increase in the trade and balance of payments, public debt has recorded growth, which rightfully this period is also characterized as a crisis of public debt. Bearing in mind that unemployment and inflation in the observed period were not related and that inflation recorded a positive trend, it was necessary to reduce unemployment to the natural one, but also to achieve appropriate GDP growth rates so that unemployment would not increase. In addition to all indicators that do not lag behind much on benchmarks or show improvement from year to year, the effects of economic policy are omitted on economic activity and employment, which is why the choice between rules and discretion is the current one.
... Labor income absorbs the largest share of the economic pie, and for most people constitutes most if not all of their income. In fact, even in a capital-rich country like the US, relatively affluent people in the 90-95th percentile of the income distribution receive about 85 percent of their income from their labor services (Piketty, 2014). For most people, then, income inequality is directly tied to wage inequality. ...
... While GDP per capita growth in advanced economies has been slowing down every decade since the 1980s, growth has accelerated in emerging markets and low-income countries, particularly since the 2000s (Duttagupta and Narita 2017).6 4 This section analyzes trends in poverty and inequality starting in 1980s. Longer time series on wealth and income inequality have been collected by Piketty (2014) and are restricted mostly to advanced economies. Piketty and Saez (2014) report sustained improvements in wealth and income distribution across Europe and the United States from the 1930s to 1970s, followed by a worsening of inequality starting in the 1970s to 1980s. ...
Article
Rising inequality and widespread poverty, social unrest and polarization, gender and ethnic disparities, declining social mobility, economic fragility, unbalanced growth due to technology and globalization, and existential danger from climate change are urgent global concerns of our day. These issues are intertwined. They therefore require a holistic framework to examine their interplay and bring the various strands together. This book brings together leading academic economists and experts from several international institutions to explain the sources and scale of these challenges. The book summarizes a wide array of empirical evidence and country experiences, lays out practical policy solutions, and devises a comprehensive and unified plan of action for combatting these economic and social disparities. This authoritative book is accessible to policy makers, students, and the general public interested in how to craft a brighter future by building a sustainable, green, and inclusive society in the years ahead.
... Os fenómenos contemporâneos da globalização, o aumento da adoção de políticas neoliberais de fortalecimento dos mercados financeiros e do capital em detrimento do trabalho, a flexibilização da gestão por via do incremento, sem precedentes, de mecanismos tecnológicos automatizados e de ferramentas digitais ou a crise energética global têm contribuído para alterações significativas nos modos de funcionamento das sociedades. Como consequência destas dinâmicas, a nível mundial, tem-se verificado o aumento do fosso entre os detentores da riqueza e do poder e aqueles que "ficam para trás" (Costa, 2012;Milanovic, 2016;Piketty, 2014;Tilly, 2005). As desigualdades no mundo estão a aumentar e os seus efeitos na estrutura das sociedades são transversais, interligando-se de forma complexa com uma variedade de fenómenos económicos, culturais, políticos e ambientais (Alvaredo et al., 2018;Dorling, 2017Dorling, , 2018Lamont, 2018;Piketty, 2020). ...
... A centralidade global que atualmente é conferida ao problema das desigualdades, por parte das principais instituições e organizações internacionais, estados nacionais e sociedades civis, deveu-se, em grande medida, à capacidade que as ciências sociais tiveram em demonstrar o caráter estrutural das desigualdades entre países e no interior dos países, e a sua persistência e intensificação ao longo dos anos (Atkinson, 2015;Milanovic, 2016;Piketty, 2014Piketty, , 2020. ...
Article
As desigualdades sociais ocupam um lugar central nas discussões científicas, políticas e internacionais acerca do desenvolvimento humano. Em setembro de 2015, as Nações Unidas adotaram a Agenda 2030 para o Desenvolvimento Sustentável, na qual a problemática das desigualdades constitui uma preocupação transversal. Tendo como foco o Objetivo de Desenvolvimento Sustentável (ODS) 10 (Meta 10.2), procuramos entender em que medida o European Social Survey (2016) se configura como uma solução adequada para a análise das desigualdades sociais no âmbito do desenvolvimento sustentável. Face à urgência de definir um sistema de indicadores robusto que permita a monitorização do progresso dos países face ao cumprimento dos ODS, propomo-nos a operacionalizar um conjunto de indicadores que, indo mais longe do que os indicadores já propostos pela ONU e pelo Eurostat, permitam compreender como diferentes níveis de inclusão social, económica e política são influenciados por desigualdades sociais nos diferentes países europeus.
... The premise underlying the dominant economic interpretation of both the EU's competition rules and those in the United States is that the free-market mechanism is both an expression of individual freedom and autonomy and an instrument to deliver the greatest public welfare benefits. However, outside competition law circles the notion that the capacity of a market system to achieve fair and equitable distribution has been contested in the last decade, both in public debates and in academic work (Piketty 2014;Pistor 2019). In this new setting, it is relevant to better understand the (nature of the) corporate power of big tech companies and to develop the (linguistic) tools for a discussion on the fundamentals of the use of competition law in the digital age. ...
... China. Seminal studies include Davies, Sandström, and Wolff (2011) and the work by Piketty (2014) and Piketty and Zucman (2014). The latter work sparked a growing number of researchers to explore whether the U-shaped pattern observed by Piketty and Zucman (2014) also applied to countries with notable different institutional set-ups. ...
Article
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We analyze the evolution of aggregate household wealth, its composition, and top wealth shares since the mid-19th century for the Netherlands, a country which played a significant role in economic history. The main forces at play are the size and variation of colonial wealth up until WWII, and the introduction of a –particularly strong– pension system thereafter. We show that the wealth-income ratio followed the familiar U-shaped pattern over the 20th century. The Netherlands, however, had the largest wealth-income ratio on record, growing since the mid-1850s, driven by industrialization and booming private foreign investments, to a peak of 900% around 1880. In contrast to other countries, the wealth-income ratio remained high up until 1929. To better understand these trends, we construct the first series on colonial wealth and show that colonial and other foreign investment account for most of the gap with other countries in the pre-WWII period. The initial post-war decline in the ratio is driven by rapid income growth. The increase in the ratio since the 1970s has been mainly driven by the uniquely large capital-funded pension system. In contrast with other major countries, housing plays only a secondary role in net wealth accumulation due to significant mortgage debt. Methodologically, we are the first to compare historical national accounts, estate multiplier, and wealth tax data approaches to construct aggregate wealth. We find that the estate multiplier is a good alternative to the historical national accounts benchmark, while the use of wealth tax data results in unrealistically low estimates.
... As might be expected, the debate on global inequalities is extremely heated. Inequality received its intellectual imprimatur in Thomas Piketty's academic blockbuster, Capital in the Twenty-First Century, published in 2013 that offered a voluminous and compelling account of wealth and income inequality in the US and Western Europe over the last three centuries (Piketty 2014). ...
Article
The 2010s was an exceptionally turbulent decade characterised by complex and contradictory changes at local, regional and global levels. The changes encompassed all spheres from the political to the economic, as well as the social, cultural, and environmental dimensions of global society. This article identifies and analyses six key trends in the historical trajectory of the period. First, the decade was marked by intense political polarization in many countries; second, was the democratic recessions and resistance in some climes; third, was the rising economic inequalities and disequilibrium; fourth was the shift in global hierarchies and hegemonies; fifth, was the emergence of surveillance capitalism; and the final one was the rebellion of nature as evident in extreme weather conditions and global struggles over climate change. In analysing these key trends the article seeks to make sense of the messy complexities, mind boggling contradictions and massive changes of the various historical conjunctures of modernity. Paul Tiyambe Zeleza, Vice Chancellor, United States International University – Africa, Nairobi, Kenya. Email: pzeleza@gmail.com
... It is widely acknowledged that globally poverty has been reduced but inequality is widening (Piketty, 2018;UNESCO, 2021). Increasing inequality is mansifetsted in all domains of human life, such as economic, social and cultural. ...
Chapter
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Equity interventions need to address questions of access, participation and student success. Equitable expansion of the higher education needs heavy public investment and support. However, many of the changes that are required to create enabling conditions for students from diverse backgrounds may not require additional resources. Empathetic engagement of institutional leaders, teachers, and staff towards the students from deprived backgrounds can make transformative change in campus and classroom in favor of equity and inclusion. NEP- 2020 provides a broader framework and principles for promoting equity and inclusion. Effectiveness of emerging programmes of action and commitment to such a course of action by the government and higher education institutions will decide the success of policy in its action mode.
... The COVID-19 external shock that released the largest and most widespread economic recovery aid and rescue packages worldwide came at a time of global attention to rising inequality around the world (Piketty 2016). As the crisis unfolded, global inequality in access to affordable medical care but also preventive healthcare became apparent (Puaschunder & Beerbaum 2020a, b). ...
... Another significant problem of human development is growing, uncontrolled inequality, which is multidimensional and ranges from inequalities in consumption and income to the inequality in terms of human development. Despite the fact that in recent decades many publications have been devoted to inequality (Piketty, 2014;Stiglitz, 2014;Stiglitz 2019 etc.), the situation remains practically unchanged. Moreover, inequality turns into a chronic and painful problem that weakens human resources and their qualitative characteristics. ...
Article
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The article is devoted to the actual problem of the subjective potential of a person in overcoming the challenges and contradictions of the modern world. The authors actualize human nature, show its inconsistency, strengths and weaknesses, insufficient degree of its knowledge. Using the socio-psychological potential of a person in solving global problems of mankind means relying on knowledge of human nature, models of his behavior, the totality of his properties and qualities. The 21st century has led not only to the complication of the surrounding world, but also to the complication of the social world of man. The social world becomes a reality for a person - perceived through the reflection of his “I” in other people. Metamorphoses of actual changes in human nature in the process of sociobiological and sociotechnical co-evolution are shown, the quality of sociality itself changes under the influence of network structural social transformations. It is proved that the strategic instability of the modern world is the result of adaptation features, a violation in her accommodation and assimilation, the destruction of the integrity of the individual. A way out of this state is possible only on the path of holistic human development, the increasing significance of its subjective potential.
... There was clear proof that workforce disparities are unjust and unsustainable [136]. However, even before the pandemic, growing disparities between the amount of resource going to capital and the amount going to labor were widely acknowledged [139]. From 1980 to 2019, annualized earnings growth in the United States averaged approximately 1% for a vast number of workers [135]. ...
Article
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There is widespread recognition that the world of work is changing, and agreement is growing that the occupational safety and health (OSH) field must change to contribute to the protection of workers now and in the future. Discourse on the evolution of OSH has been active for many decades, but formalized support of an expanded focus for OSH has greatly increased over the past 20 years. Development of approaches such as the National Institute for Occupational Safety and Health (NIOSH)’s Total Worker Health® concept and the World Health Organization (WHO)’s Healthy Workplace Framework are concrete examples of how OSH can incorporate a new focus with a wider view. In 2019, NIOSH initiated a multi-year effort to explore an expanded focus for OSH. This paper is a report on the outputs of a three-year cooperative agreement between NIOSH and The University of Texas School of Public Health, which led to subject matter expert workshops in 2020 and an international conference of global interest groups in 2021. This article traces the background of these meetings and identifies and assesses the lessons learned. It also reviews ten thematic topics that emerged from the meetings: worker health inequalities; training new OSH professionals; future OSH research and practice; tools to measure well-being of workers; psychosocial hazards and adverse mental health effects; skilling, upskilling and improving job quality; socioeconomic influences; climate change; COVID-19 pandemic influences; and strategic foresight. Cross-cutting these themes is the need for systems and transdisciplinary thinking and operationalization of the concept of well-being to prepare the OSH field for the work of the future.
... The fourth industrial revolution (4IR) is associated with advances in AI, robotics, IoT, 3D visualisation, genetic engineering, quantum computing, and other emerging technologies, all directed at raising the quality of life and addressing critical income inequality challenges unemployment rates in the job markets. The development of the financial system of any nation is an indicator of competitiveness and a significant GDP influencer (Piketty, 2014). The time lag between capital investment and investment return reflects the risk and uncertainty of the financial market. ...
Research Proposal
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This project was designed to investigate the application of Big Data Technology (BDT) to developing Oman’s Global Trade Competitiveness, emphasising the variables of economic success in the 4th Industrial Revolution. In essence, as aptly raised in a similar previous project (Saxena & Sharma, 2016), the current project is expected to ascertain the contribution of Big Data to policymaking and to identify the socio-economic domains suitable for Big Data analytics, given the imperatives for sustainable economic success under the Vision 2040The emerging data-driven world and the Internet of Things (IoT) give valuable insights that can improve the way we work and ultimately help us attain the desired return on investment (ROI). Thus, the phrase data-rich and information poor (DRIP) has long been used (Peters & Waterman, 1982) to describe organisations with enormous amounts of data and tremendous opportunities to use the data to produce meaningful information and achieve global competitiveness and sustainability. The emerging usage of BDT is associated with predictive analytics and other advanced data analytics methods that extract sustainable socio-economic value from big data derivable from multiple sources. The dynamics of emergent macro-and micro-economic and environmental factors combine to generate big data in global competitiveness analytics. Thus, the traditional method could not help researchers to investigate and analyse these data - researchers need to use extensive data/machine learning (BD/ML) approaches to analyse these data to improve a country’s global competitiveness. Clear-eye Strategy Implementation is supported by deploying emerging technologies, including the BD analytical capabilities. Hence, this interdisciplinary (Business-Computing) project proposal is scientifically and innovatively designed to support the implementation of Oman Vision 2040 economic management strategy. Embedding in the BDT application, this project will provide a snapshot of the current situation in the Sultanate of Oman, re-assessing the extent to which the Sultanate today is proceeding towards transforming into a virile, globally competitive market economy. The project will also highlight the critical data gaps in assessing current national policies and performance. While measuring all aspects of achieving economic transformation and sustainable global competitiveness remains challenging, extant international studies such as WEF (2020) show that no country is yet fully ready to transform; the "Nordic" model appears to be the most promising in shifting towards a globally competitive market economy. Therefore, the present project proposal is novel and original in its intendment to fill this gap in the Omani context. The proposal has highlighted the current knowledge of BDT and the sparsity of BDT applications to enhance a country’s global competitiveness. The project has proposed a multidisciplinary team of local and international (The UK, India, UAE, and Nigeria) researchers and scholars to achieve the project purpose. Given the ‘global’ posture of the project, the scope for the research-teaching nexus is significant, cutting across the various disciplines of Social, Environmental, and Applied Sciences, Engineering, Architecture, Business and Computing. Keywords: Artificial intelligence, Big data, Business intelligence, Dashboard, Global trade competitiveness, Predictive analytics, Strategic management, Sustainability
... It is widely believed that the world's income inequality has increased over past decades [1,2]. Many different theories seek to explain this phenomenon, such as the evolution of the shares of capital-labor [3], changing returns to human capital and skilldriven technological change [4][5][6][7], and market concentration resulting from corporate market power and oligopoly [8,9]. Other work has concentrated more on the relationships between employers and workers and changing institutions [1,[10][11][12][13]. ...
Article
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In this work, we study a capital–labor model by considering the interaction between the new proposed and the confirmed free jobs, the precariat labor force, and the mature labor force by introducing Brownian motion and Lévy noise. Moreover, we illustrate the well-posedness of the solution. In addition, we establish the conditions of the extinction of both the free jobs and labor force; subsequently, we prove the persistence of only the free jobs, and we also show the conditions of the persistence of both the free jobs and labor force. Finally, we validate our theoretical finding by numerical simulation by building a new stochastic Runge–Kutta method.
... Видатний французький економіст Т. Пікетті у своїй популярній праці «Капітал у ХХІ столітті» довів, що в країнах Заходу, починаючи з 80-х років ХХ століття, відбувається більш швидке зростання доходів від спекулятивно нажитого капіталу на відміну від продуктивної праці, що є найважливішою причиною посилення нерівності [25]. ...
... Increasing inequality can be observed to occur "naturally" as societies developed from foraging to farming, became more specialised, more complex, could capture the energy of the sun through agriculture, and eventually had access to an abundance of fossil fuel energy. To reduce social and economic inequalities, government tax policies and transfers are required to drive income inequality down, as initially happened in the OECD countries by 1970 (Morris, 2015;Piketty, 2014). ...
Article
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Cities of the future will need to cope with the triple challenges of urban growth, planetary boundaries leading to reduced energy and other resources, and rapid climate change. In response to the challenges of these complexities, urban growth and innovations in networked infrastructure development need to go hand-in-hand to transform urban systems and sustain the urban health advantage. In order to achieve this, knowledge and policy-making need to undergo processes of accelerated learning. The International Science Council’s global science programme “Urban Health and Wellbeing: A Systems Approach” has formulated goals to meet the urban health challenges of future cities.
... It could corroborate the literature that supports the inability of coexistence between neoliberal capitalism and democracy, because they generate excluding interests (Polanyi, 2001;Piketty, 2014) Good Citizen (in-group or us & positive self-representations) In Wilson Witzel's government plan, there is 21 mentions for "citizens", and most of them with a sense of patronage in relation to their needs -not to imply that other politicians would do the same. The citizen of Rio de Janeiro is the "good citizen", as this is the approach made by the candidate himself in some episodes of right-wing demonstrations, such as when he held up a broken sign by Marielle Franco and on the streets of Copacabana 10 . ...
Preprint
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Populists (re)orient social identities by creating a dichotomous perspective in which certain groups are selected to be a menace. How is this phenomenon possible in so different contexts? A cultural and an identity turn seems to be a necessary condition for the success of populism. This phenomenon is better seen at how candidates consider racial groups as ideal citizens and other as subcitizens. Critical Discourse Analysis helped to elucidate social-hierarchies and power relations towards racialized groups in Quebec and in Rio de Janeiro during 2018 elections. This framework deepens our comprehension on the complex causality of populism by focusing on citizenship.
... A third key challenge is the issue of social equity and rising inequality over the last several decades, leading to serious negative consequences for individuals, families, communities and society (Reich 2015(Reich , 2020Stiglitz 2019;Flora et al. 2016;Piketty 2014Piketty , 2020Giridharadas 2019;Geismer 2022). The global regime of neoliberalism, that has dominated much of the economic policymaking since late 1970, has worsened inequality, strafed social nets and public investment, and threatened democracy. ...
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... Although levels of inequality in the developed world are higher in the United States than almost any other developed country (Siripurapu, 2022), significant divergences in income distribution are present in other developed countries (Piketty, 2017). In Britain and France, for example, accumulated wealth was noted in 2014 to be "returning to relative levels not seen since the First World War" (Rotman, 2014). ...
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... The international order proved resilient as attempts were made to stabilise the global economy. However, the economic recovery has been partial and weak -the slowest recovery in the period since 1945 -and living standards for the majority have stagnated, even inequality in wealth and income have reached levels not seen since the early years of the twentieth century (Piketty, 2014). ...
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The great banyan tree of Cambridge heterodox traditions extended its roots and branches, and flourished for over a half century from the landmark year of 1926 which saw Piero Sraffa’s iconoclastic article in the Economic Journal, and John Maynard Keynes’s dramatic pronouncement heralding the death of laissez-faire. Then, within the short space of about 15 years from the mid-1970s, these lineages and most of their practitioners evanesced or were essentially purged from the Faculty of Economics and the Department of Applied Economics—the turnaround occurring as a result of a sustained campaign by the orthodox mainstream camp in Cambridge, enabled by the sea change in national and global politics from state-led or state-managed Keynesian or state-capitalist development strategies in the North and South, towards raw ‘free-market’ neoliberalism on a global scale. The Hahn-Matthews-led campaign, through a series of battles, had won its local Cambridge war and purged virtually all vestiges of heterodox economics, as well as related disciplines, from its midst; it had attained its objective of sanskritised neoclassical disciplinary purity. What then transpired the day after the battle was done, what came of the victors and what fate befell the various vanquished tribes of heterodox apostates? This chapter follows these trajectories and uncovers some expected and several counter-intuitive outcomes both within the Faculty core, which tended to lose rank in its chosen orthodox world, and on the periphery where the diverse ‘purged’ groups reincarnated themselves and rebuilt productive institutional lives, and flourishing reputations that, by many ‘objective’ measures, exceed those achieved by the orthodox economists at the core. Widely recorded student satisfaction and appreciation at the periphery contrasted with student protest campaigning against the reductionist mono-disciplinary approach of mainstream economics within the Faculty. The chapter notes also some recent developments reflecting the preferences of major donors to Cambridge economics; ironically, these donations, and nudges for a change of direction again towards regenerated forms of heterodox economics, come from some famously successful Cambridge alumni who were supervised in their Cambridge years by leading heterodox economists, and who later made their fortunes in the whirlpool world of global finance, a resonance to Keynes that is unmissable.
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In this paper, I estimate income inequality in Warsaw in the early XIX century. The data source is the 1833 tax census. I compare the income of Jews and Christians and investigate the spatial dimension of income inequality in the city. In 1833, income inequality in Warsaw was very high by modern standards, and medium by contemporary standards. The Gini index stood at 0.59, and the share of the top 1% was 19%. The inequality extraction ratio equaled 76%. A high level of economic inequality and inequality extraction might be driven by the fact that Russian Poland was still a rural economy based on serfdom. The mean income of Jews was significantly higher than the mean income of Christians. Mean income varied strongly across districts of the city. The income hierarchy of districts was quite similar to today.
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Rozpoznanie i opisanie tendencji zmian w kształtowaniu się potrzeb osób mieszkających w krajach Europy Środkowo-Wschodniej, w tym w szczególności w Polsce, związanych z ich mobilnością w świecie realnym i aktywnością w świecie wirtualnym.
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Standard solutions to the threat of >1.5 °C global average warming are not ambitious enough to prevent large-scale irreversible loss. Meaningful climate action requires interventions that are preventative, effective and systemic—interventions that are radical rather than conventional. New forms of radical intervention are already emerging, but they risk being waylaid by rhetorical or misleading claims. Here, to encourage a more informed debate, we present a typology of radical intervention based on recent studies of resilience, transition and transformation. The typology, which is intended to be provocative, questions the extent that different interventions can disrupt the status quo to address the root drivers of climate change. In this Perspective, the authors argue that radical, rather than conventional, interventions are necessary to address climate change. They discuss the definitions and interpretations of the term ‘radical’, and present a typology of radical intervention that addresses the root drivers of climate change.
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Kolektīvā monogrāfija “Kopīgo resursu pārvaldība krīžu saplūšanas laikā” apkopo galvenās pētnieciskā projekta “Gatavi pārmaiņām? Kopīgo dabas resursu ilgtspējīga pārvaldība” (LZP-2019/1-0319) (projekta vadītājs LU SZF SPPI vadošais pētnieks Jurijs Ņikišins) atziņas.
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This theory-based paper attempts classifying and combining methods of orthodox and heterodox economics regarding the measurement of technology levels. The importance of measuring the level of technology is illustrated by technology being a key factor in several neoclassical models. However, just as for the concept of utility, traditional economics treats the level of technology as an abstract scientific construct, without attempts for an absolute quantification. This paper argues that through a systematic classification and various methods, starting- and end points, milestones and even units can be determined. Through surveying the literature, the paper identifies the existing options of measurement, and their shortcomings. Technology is looked at as a “stock”, as opposed to the overrepresented “flow” nature. This gives space for the methods of constructing an absolute scale, and for the unique concept of the “steady-state technology”. Distinctions are made between demand-side and supply-side measurement, as well as between historical and geometrical methods of constructing scales. The methods are illustrated, though not fully implemented, due to limitations in scale and scope. Finally, the paper shows how heterodox economic branches, such as the newly emerging moral economic school, allow for the demand-side measurement to a greater extent, given the adjusted economic axioms. Keywords: technology, demand side, historical method, geometrical method, moral economics
Preprint
I introduce a new way of decomposing the evolution of the wealth distribution using a simple continuous time stochastic model, which separates the effects of mobility, savings, labor income, rates of return, demography, inheritance, and assortative mating. Based on two results from stochastic calculus, I show that this decomposition is nonparametrically identified and can be estimated based solely on repeated cross-sections of the data. I estimate it in the United States since 1962 using historical data on income, wealth, and demography. I find that the main drivers of the rise of the top 1% wealth share since the 1980s have been, in decreasing level of importance, higher savings at the top, higher rates of return on wealth (essentially in the form of capital gains), and higher labor income inequality. I then use the model to study the effects of wealth taxation. I derive simple formulas for how the tax base reacts to the net-of-tax rate in the long run, which nest insights from several existing models, and can be calibrated using estimable elasticities. In the benchmark calibration, the revenue-maximizing wealth tax rate at the top is high (around 12%), but the revenue collected from the tax is much lower than in the static case.
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The ‘Anthropocene’ has become a fad: it is difficult these days, in the academic milieu, not to come across allusions to this new geological era in books, papers and conferences. However, as several authors have already acknowledged, it would be unfair and ideological to hold humanity as a whole (i.e. the anthropos) generally responsible for the ecological-social evils that the planet is increasingly suffering. It is necessary to recognise that capitalism, due to its very economic dynamics, is behind the ‘Great Acceleration’ in terms of consumption, the use of resources and environmental degradation that can be observed since the middle of the twentieth century. This is the reason why ‘Capitalocene’ has been suggested as a terminological alternative. As far as the crucial debate about the ‘Capitalocene’ and its challenges is concerned, geographers are still more ‘supporting actors’ than ‘protagonists.’ To a large extent, this has to do with the ‘epistemological purification’ strategy that many of us have pursued since the 1970s, in the wake of the discipline’s radical turn. The weakening of the discipline’s identity nucleus with regard to a commitment to the integration of natural and social knowledge led to a decrease in the ability to propose several types of reflections and research related to the ‘(ecological-)social metabolism,’ the planetary dilemmas and the contemporary ecosocial conflicts, as well as a whole series of specific issues and problems—all things that require, to a greater or lesser extent, the construction of hybrid epistemic objects. In the last fifteen years, the emergence of a certain environmental geography has increased the hope that many radical geographers have finally begun to understand that in order to preserve a high level of sophistication and coherence from the point of view of social research, it is not necessary to give up a genuine interest in geobiophysical knowledge.KeywordsAnthropoceneCapitaloceneCapitalist world-systemEnvironmental geography
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Is there a relationship between income inequality and the electoral success of incumbent governments in developing and transitional democracies, and if so, what explains its variations? Using a large N study of national legislative elections in 38 developing and transitional democracies from 1987 to 2016 and controlling for economic growth, inflation, and unemployment rates, this paper tests: (i) whether change in income inequality is negatively associated with the vote share for the incumbent party and (ii) whether the level of media freedom affects the extent of economic voting. Overall, we find evidence that increasing income inequality is negatively and significantly related to the vote share for the incumbent but only in countries with free or somewhat‐free media. Furthermore, consistent with past studies, the most robustly significant economic factor in affecting incumbent vote shares remains economic growth.
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This comprehensive collection discusses topical issues essential to both scholarship and policy making in the realm of Lifelong Learning policies and how far they succeed in supporting young people across their life courses, rather than one-sidedly fostering human capital for the economy. Examining specific regional and local contexts across Europe, all various in context, this book uses original research to evaluate differences in scope, approach, orientation, and objectives. It enquires into the embedding of LLL policies into the regional economy, the labour market, education and training systems and the individual life projects of young people, with focus on those in situations of near social exclusion.
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In recent decades, domestic sociology has been successfully developing class analysis, i.e. the study of modern Ukrainian society as a class society with the corresponding identification of the structure and composition of social classes and the various effects of class belonging to individuals. The next stage in the development of class analysis in Ukraine was the participation of Ukrainian researchers in the implementation of a representative study under the International Social Survey Programme (ISSP) with the main survey module “Social Inequality” and the publication of its analytical results in the monograph “Dynamics of Perception of Social Inequality in Ukraine according to the International Program of Social Research 2009 and 2019” (2020). The analytical work presented in the article is a thorough examination and clarification of the results of the ISSP-2019 study, in particular, regarding the social-class conditioning of the perception of social inequality. A number of research hypotheses were tested: in particular, that social classes differ statistically significantly in terms of emotional perception of social inequality; there is a relationship between support for redistributive policies through changes in the tax burden for people with high incomes and social class; there are statistically significant differences between classes in choosing a dominant strategy for achieving life success; there is a connection between the recognition of the importance of using informal practices to achieve life success and the class position of the individual; there is a connection between the recognition of the importance of socio-ascriptive characteristics for achieving life success and the class position of the individual. It is confirmed that there is a weak connection between the class belonging of individuals and the specified irrelevant variables, as well as the presence of a number of significant differences between social classes regarding the perception of various aspects of social inequality in society, in particular, regarding the classes of the petty bourgeoisie and the working class.
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Inequalities in income, wealth, quality of life, health and education are an intensively researched field of economics. In this study, we examine the inequality in sports expenditures of Hungarian households. We hypothesize that the development of income inequalities will also correlate significantly to inequalities in sports consumption, and this trend has been intensifying over the past two decades. The research is based on the Household Budget Survey database of Hungarian households for the period 2005-2017. The net income conditions of the population and the sports expenditure items recorded on the basis of the COICOP nomenclature are examined by income decile. Data is analysed using descriptive statistics, inequality indicators and correlation calculations. Aggregate household expenditures on passive sports consumption show a stagnant trend, while aggregate expenditures on active sports consumption follow a slightly upward trend among the Hungarian population. Inequality indicators show growing inequalities in terms of income and sports expenditure over the reviewed period. Income inequality and sports spending inequality move together. The Hungarian population is becoming polarised in terms of both income and level of sports expenditure.
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This chapterModels discusses the concept of developmentDevelopment within the current economicEconomic framework. It deals with the pros and cons related to the economicEconomicgrowthGrowth trajectory founded on neoliberalismNeoliberalism and capitalismCapitalism that has advanced many nations globally, especially the rich nations, while the darker and destructive impacts have increased to the detriment of especially the poorer countries. This darker side that has led to crises related to climateClimate, biosphere, and resources, subsequently causing a humanitarian crisis is examined. The chapter compares the current developmentDevelopmentmodelModels with the sustainable developmentSustainable developmentmodelModels. Even though the word developmentDevelopment figures in both modelsModels they are fundamentally different. The chapter defines these differences, and points to emerging symptoms that indicate a shift away from neoliberal capitalismCapitalism brought about by the pandemic, and talks about the reasons behind this. The chapter discusses the role of the state as it is the entity solely responsible for the well-being, safety, and progress of its citizens. As such, it is the most vital factor in implementing sustainabilitySustainability. The chapter closes by looking at future perspectives and other factors to assess the possibility of implementing sustainable developmentSustainable development in the current framework.
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Historians constantly wrestle with uncertainty, never more so than when attempting quantification, yet the field has given little attention to the nature of uncertainty and strategies for managing it. This volume proposes a powerful new approach to uncertainty in ancient history, drawing on techniques widely used in the social and natural sciences. It shows how probability-based techniques used to manage uncertainty about the future or the present can be applied to uncertainty about the past. A substantial introduction explains the use of probability to represent uncertainty. The chapters that follow showcase how the technique can offer leverage on a wide range of problems in ancient history, from the incidence of expropriation in the Classical Greek world to the money supply of the Roman empire.
Chapter
Gehen wir davon aus, dass Globalisierung (a) ein Mindestmaß (mit tendenziell steigendem Anteil) an internationalen Transaktionen, (b) wachsende Skalenerträge durch eine Konzentration spezifischer Produktionsprozesse auf die jeweils optimalen Standorte, (c) eine zunehmende, transnationale Vernetzung von Produktionsprozessen im Zusammenhang mit komplexen Wertschöpfungsketten und (d) ein entsprechend flexibles und verlässliches internationales Finanzsystem voraussetzt, dann wird deutlich, dass die technologische Entwicklung von Produktion, Transport und Kommunikation eine herausragende Rolle spielt.
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Resumen: La implantación de los estudios culturales dentro del sistema universitario y científico español es muy baja. Cuando se produce suele hacerlo dentro del ámbito de co-nocimiento de las humanidades y no en el de las ciencias sociales. Este artículo explora la presencia de los estudios culturales en el ámbito de la sociología. Trata de mostrar su es-casa presencia en la sociología institucional y en la producción científica sociológica. Por último, muestra los factores institucionales, epistemológicos y metodológicos que inciden en la ausencia de contenidos de estudios culturales en la sociología y en la ausencia de investigaciones de carácter interdisciplinar. Abstract: The implementation of cultural studies within the Spanish academic and scientific system is very low. When it happens, it is usually within the scope of knowledge of the humanities and not in that of the social sciences. This article explores the presence of cultural studies in the field of sociology. It tries to show its limited presence in institutional sociology and in sociological scientific production. Finally, it shows the institutional, epis-temological, and methodological factors that influence the absence of cultural studies contents in sociology and the lack of interdisciplinary research. Introducción Los estudios culturales son una disciplina y un enfoque con enorme pre-sencia en la mayor parte de los entornos universitarios y científicos mun-diales. Sin embargo, apenas tienen espacio en España. Estos, cuando se encuentran, suelen estar ligados a las humanidades y no a las ciencias so
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Using large samples of estate tax returns, we construct new series on wealth concentration in Paris and France from 1807 to 1994. Inequality increased until 1914 because industrial and financial estates grew dramatically. Then, adverse shocks, rather than a Kuznets-type process, led to a massive decline in inequality. The very high wealth concentration prior to 1914 benefited retired individuals living off capital income (rentiers) rather than entrepreneurs. The very rich were in their seventies and eighties, whereas they had been in their fifties a half century earlier and would be so again after World War II. Our results shed new light on ongoing debates about wealth inequality and growth.
This chapter offers an overview of the empirical and theoretical research on the long-run evolution of wealth and inheritance. Wealth-income ratios, inherited wealth, and wealth inequalities were high in the eighteenth to nineteenth centuries up until World War I, then sharply dropped during the twentieth century following World War shocks, and have been rising again in the late twentieth and early twenty-first centuries. We discuss the models that can account for these facts. We show that over a wide range of models, the long-run magnitude and concentration of wealth and inheritance are an increasing function of r--g where r- is the net-of-tax rate of return on wealth and g is the economy's growth rate. This suggests that current trends toward rising wealth-income ratios and wealth inequality might continue during the twenty-first century, both because of the slowdown of population and productivity growth, and because of rising international competition to attract capital.
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In Capital in the Twenty-First Century, Thomas Piketty uses the market value of tradable assets to measure both productive capital and wealth. As a measure of wealth this is problematic because it ignores the value of human capital and transfer wealth, which have grown enormously over the last 300 years. Thus the constancy of the wealth/income ratio as portrayed in his data is an illusion. Further, the types of wealth that he does not measure are more equally distributed than tradable assets. The approach also incorrectly identifies capital gains due to reduced discount rates as increases in the capital stock.
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In his influential book, Capital in the Twenty-First Century, Thomas Piketty argues forcefully that rising wealth and wealth inequality is an inherent characteristic of capitalist economies and calls for strong policy responses, in particular a substantial wealth tax implemented globally. This paper takes issue with the facts, logic, and policy conclusions in Piketty's book, suggesting that the factors needed to support the inexorable rise in capital's share and concentration are lacking and that among tax policy reforms aimed at dealing with economic inequality a wealth tax finds little support either in Piketty's own work or elsewhere in the literature.
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How do aggregate wealth-to-income ratios evolve in the long run and why? We address this question using 1970–2010 national balance sheets recently compiled in the top eight developed economies. For the United States, United Kingdom, Germany, and France, we are able to extend our analysis as far back as 1700. We find in every country a gradual rise` of wealth-income ratios in recent decades, from about 200–300% in 1970 to 400–600% in 2010. In effect, today’s ratios appear to be returning to the high values observed in Europe in the eighteenth and nineteenth centuries (600–700%). This can be explained by a long-run asset price recovery (itself driven by changes in capital policies since the world wars) and by the slowdown of productivity and population growth, in line with the β = s g β=sg Harrod-Domar-Solow formula. That is, for a given net saving rate s = 10%, the long-run wealth-income ratio β is about 300% if g = 3% and 600% if g = 1.5%. Our results have implications for capital taxation and regulation and shed new light on the changing nature of wealth, the shape of the production function, and the rise of capital shares. JEL Codes: E10, E20, D30, D31, D33.
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This article attempts to estimate the magnitude of corporate tax avoidance and personal tax evasion through offshore tax havens. US corporations book 20 percent of their profits in tax havens, a tenfold increase since the 1980; their effective tax rate has declined from 30 to 20 percent over the last 15 years, and about two-thirds of this decline can be attributed to increased international tax avoidance. Globally, 8 percent of the world?s personal financial wealth is held offshore, costing more than $200 billion to governments every year. Despite ambitious policy initiatives, profit shifting to tax havens and offshore wealth are rising. I discuss the recent proposals made to address these issues, and I argue that the main objective should be to create a world financial registry.
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This Review presents basic facts regarding the long-run evolution of income and wealth inequality in Europe and the United States. Income and wealth inequality was very high a century ago, particularly in Europe, but dropped dramatically in the first half of the 20th century. Income inequality has surged back in the United States since the 1970s so that the United States is much more unequal than Europe today. We discuss possible interpretations and lessons for the future.
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This paper analyzes the problem of optimal taxation of top labour incomes. We develop a model where top incomes respond to marginal tax rates through three channels: (1) the standard supply-side channel through reduced economic activity, (2) the tax avoidance channel, (3) the compensation bargaining channel through efforts in influencing own pay setting. We derive the optimal top tax rate formula as a function of the three elasticities corresponding to those three channels of responses. The first elasticity (supply side) is the sole real factor limiting optimal top tax rates. The optimal tax system should be designed to minimize the second elasticity (avoidance) through tax enforcement and tax neutrality across income forms, in which case the second elasticity becomes irrelevant. The optimal top tax rate increases with the third elasticity (bargaining) as bargaining efforts are zero-sum in aggregate. We then analyze top income and top tax rate data in 18 OECD countries. There is a strong correlation between cuts in top tax rates and increases in top 1% income shares since 1975, implying that the overall elasticity is large. But top income share increases have not translated into higher economic growth, consistent with the zero-sum bargaining model. This suggests that the first elasticity is modest in size and that the overall effect comes mostly from the third elasticity. Consequently, socially optimal top tax rates might possibly be much higher than what is commonly assumed.
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This paper derives optimal inheritance tax formulas that (a) capture the key equity-efficiency trade-off, (b) are expressed in terms of estimable sufficient statistics, (c) are robust to the underlying structure of preferences. We consider dynamic stochastic models with general and heterogeneous bequest tastes and labor productivities. We limit ourselves to simple but realistic linear or two-bracket tax structures to obtain tractable formulas. We show that long-run optimal inheritance tax rates can always be expressed in terms of distributional parameters, aggregate behavioral elasticities and social preferences for redistribution. Importantly, those results carry over with tractable modifications to (a) the case with social discounting (instead of steady-state welfare maximization), (b) the case with partly accidental bequests, (c) the standard Barro-Becker dynastic model. In all cases, the optimal inheritance tax rate increases with the concentration of bequest received and decreases with the elasticity of aggregate bequests to the net-of-tax rate. The optimal tax rate is positive and quantitatively large if concentration is high, the elasticity is low and society cares mostly about those receiving little inheritance. In contrast, the optimal tax rate is negative when society cares mostly about inheritors. We propose a calibration using micro-data for France and the United States. We find that for realistic parameters the optimal inheritance tax rate might be as large as 50%-60% - or even higher for top bequests, in line with historical experience.
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This paper divides the population into two groups: the "inheritors" or "rentiers" (whose wealth is smaller than the capitalized value of their inherited wealth, i.e. who consumed more than their labor income during their lifetime); and the "savers" or "self-made men" (whose wealth is larger than the capitalized value of their inherited wealth, i.e. who consumed less than their labor income). Applying this simple theoretical model to a unique micro data set on inheritance and matrimonial property regimes, we find that Paris in 1872-1937 looks like a prototype "rentier society". Rentiers made about 10% of the population of Parisians but owned 70% of aggregate wealth. Rentier societies thrive when the rate of return on private wealth r is permanently and substantially larger than the growth rate g (say, r=4%-5% vs g=1%-2%). This was the case in the 19th century and early 20th century and is likely to happen again in the 21st century. In such cases top successors, by consuming part of the return to their inherited wealth, can sustain living standards far beyond what labor income alone would permit.
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A recent literature has constructed top income shares time series over the long run for more than twenty countries using income tax statistics. Top incomes represent a small share of the population but a very significant share of total income and total taxes paid. Hence, aggregate economic growth per capita and Gini inequality indexes are sensitive to excluding or including top incomes. We discuss the estimation methods and issues that arise when constructing top income share series, including income definition and comparability over time and across countries, tax avoidance, and tax evasion. We provide a summary of the key empirical findings. Most countries experience a dramatic drop in top income shares in the first part of the twentieth century in general due to shocks to top capital incomes during the wars and depression shocks. Top income shares do not recover in the immediate postwar decades. However, over the last thirty years, top income shares have increased substantially in English speaking countries and in India and China but not in continental European countries or Japan. This increase is due in part to an unprecedented surge in top wage incomes. As a result, wage income comprises a larger fraction of top incomes than in the past. Finally, we discuss the theoretical and empirical models that have been proposed to account for the facts and the main questions that remain open. (JEL D31, D63, H26, N30)