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Wealth inequality in the long run: A Schumpeterian growth perspective


  • Jakob B. Madsen
  • Antonio Minniti
  • Francesco Venturini


This paper extends Piketty’s analysis of the wealth-income ratio used as a proxy for wealth inequality, to allow for innovation. Drawing on a Schumpeterian (R&D-based) growth model that incorporates both tangible and intangible capital and using historical data for 21 OECD countries, we find the wealth-income ratio to be significantly and positively related to R&D intensity and the fixed capital investment ratio, but negatively related to income growth. Accounting for the innovation-induced counteracting growth-effect on the wealth-income ratio, we show that the net effect of R&D on wealth inequality is positive.

Suggested Citation

  • Jakob B. Madsen & Antonio Minniti & Francesco Venturini, 2018. "Wealth inequality in the long run: A Schumpeterian growth perspective," CAMA Working Papers 2018-35, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:camaaa:2018-35

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    Cited by:

    1. Chu, Angus C. & Peretto, Pietro F., 2023. "Innovation and inequality from stagnation to growth," European Economic Review, Elsevier, vol. 160(C).
    2. repec:hal:spmain:info:hdl:2441/1j4v8sl4fc9a49ankmnhv6bb6a is not listed on IDEAS
    3. Iacopetta, Maurizio & Peretto, Pietro F., 2021. "Corporate governance and industrialization," European Economic Review, Elsevier, vol. 135(C).
    4. Jakob Madsen & Holger Strulik, 2023. "Testing unified growth theory: Technological progress and the child quantity‐quality tradeoff," Quantitative Economics, Econometric Society, vol. 14(1), pages 235-275, January.
    5. Popoyan, Lilit & Napoletano, Mauro & Roventini, Andrea, 2020. "Winter is possibly not coming: Mitigating financial instability in an agent-based model with interbank market," Journal of Economic Dynamics and Control, Elsevier, vol. 117(C).
    6. Kuhn, Michael & Minniti, Antonio & Prettner, Klaus & Venturini, Francesco, 2023. "Medical innovation, life expectancy, and economic growth," Department of Economics Working Paper Series 342, WU Vienna University of Economics and Business.
    7. repec:hal:spmain:info:hdl:2441/7nn6fpcnia859pog8o084b54ct is not listed on IDEAS
    8. Lu Han, 2019. "The Mutable Geography of Firms' International Trade: Evidence and Macroeconomic Implications," Working Papers 201909, University of Liverpool, Department of Economics.
    9. Abeliansky, Ana Lucia & Prettner, Klaus, 2023. "Automation and population growth: Theory and cross-country evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 208(C), pages 345-358.
    10. Jakob B. Madsen & Antonio Minniti & Francesco Venturini, 2023. "The long‐run investment effect of taxation in OECD countries," Economica, London School of Economics and Political Science, vol. 90(358), pages 584-611, April.
    11. Antonelli, Cristiano & Tubiana, Matteo, 2023. "The rate and direction of technological change and wealth and income inequalities in advanced countries," Technological Forecasting and Social Change, Elsevier, vol. 191(C).

    More about this item


    Wealth-income Ratio; Piketty's Second Law; Schumpeterian Growth.;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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