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Inherited vs self-made wealth: Theory & evidence from a rentier society (Paris 1872-1927)

Author

Listed:
  • Thomas Piketty

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique)

  • Gilles Postel-Vinay

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique)

  • Jean-Laurent Rosenthal

    (CS CALTECH - Computer Science Department - CALTECH - California Institute of Technology)

Abstract

We divide decedents into two groups: "rentiers" (whose wealth is smaller than the capitalized value of their inherited wealth) and "savers" (who consumed less than their labor income). Applying this split to a unique micro data set on inheritance and matrimonial property regimes, we find that Paris from 1872 to 1927 was a "rentier society". Rentiers made up 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 larger than the growth rate g (say, r = 4% vs g = 2%). This was the case in the 19th and early 20th centuries and is likely to happen again in the 21st century. At the time, top successors' capital income sustains living standards far beyond what labor income alone would permit.

Suggested Citation

  • Thomas Piketty & Gilles Postel-Vinay & Jean-Laurent Rosenthal, 2013. "Inherited vs self-made wealth: Theory & evidence from a rentier society (Paris 1872-1927)," PSE-Ecole d'économie de Paris (Postprint) halshs-00944868, HAL.
    • Handle: RePEc:hal:pseptp:halshs-00944868
    DOI: 10.1016/j.eeh.2013.07.004
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00944868v1
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