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Assessing Piketty’s second law of capitalism


  • Jakob B Madsen
  • Antonio Minniti
  • Francesco Venturini


This paper assesses Piketty’s second fundamental law of capitalism to investigate patterns and determinants of wealth inequality over the last century and a half. We first discuss the foundations of this theory on the basis of the most popular growth models, and then perform a long-run regression analysis of wealth inequality using Piketty and Zucman’s data and a new historical data set for the OECD countries covering the period since 1870 onwards. We find that the wealth-to-income ratio, β, is significantly related to the ratio between the saving rate, s, and the rate of income growth, g. The estimated coefficient for the s/g ratio ranges from 0.05 to 0.18, depending on the specification, while the theory predicts a unitary value. It is also shown that the wealth-to-income ratio responds to the variations in income growth much more than to variations in the saving rate.

Suggested Citation

  • Jakob B Madsen & Antonio Minniti & Francesco Venturini, 2018. "Assessing Piketty’s second law of capitalism," Oxford Economic Papers, Oxford University Press, vol. 70(1), pages 1-21.
  • Handle: RePEc:oup:oxecpp:v:70:y:2018:i:1:p:1-21.

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    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • P10 - Economic Systems - - Capitalist Systems - - - General


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