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Capital and Wealth in the 21st Century

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  • David N. Weil

Abstract

In Capital in the 21st Century, Thomas Piketty uses the market value of tradeable 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 tradeable assets. The approach also incorrectly identifies capital gains due to reduced discount rates as increases in the capital stock.

Suggested Citation

  • David N. Weil, 2015. "Capital and Wealth in the 21st Century," NBER Working Papers 20919, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:20919
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    1. repec:hal:spmain:info:hdl:2441/1eob9f9aas9q18hfjsiqhggvi2 is not listed on IDEAS
    2. Bonnet, Odran & Chapelle, Guillaume & Trannoy, Alain & Wasmer, Etienne, 2021. "Land is back, it should be taxed, it can be taxed," European Economic Review, Elsevier, vol. 134(C).
    3. Odran Bonnet & Guillaume Flamerie de La Chapelle & Alain Trannoy & Etienne Wasmer, 2019. "Secular Trends in Wealth and Heterogeneous Capital: Land is Back... and Should Be Taxed," Working Papers hal-03570837, HAL.
    4. David N. Weil, 2015. "Capital and Wealth in the Twenty-First Century," American Economic Review, American Economic Association, vol. 105(5), pages 34-37, May.
    5. Adam Looney & Kevin B. Moore, 2015. "Changes in the Distribution of After-Tax Wealth: Has Income Tax Policy Increased Wealth Inequality?," Finance and Economics Discussion Series 2015-58, Board of Governors of the Federal Reserve System (U.S.).
    6. Tarrazo, Manuel, 2018. "Piketty’s Capital in the 21st Century and modern finance: The other [r−g] relationship," The Quarterly Review of Economics and Finance, Elsevier, vol. 67(C), pages 162-174.
    7. Odran Bonnet & Guillaume Chapelle & Alain Trannoy & Etienne Wasmer, 2019. "Secular Trends in Wealth and Heterogeneous Capital: Land is Back... and Should Be Taxed," Sciences Po publications 2019-14, Sciences Po.
    8. Soon Ryoo, 2018. "Top income shares and aggregate wealth-income ratio in a two-class corporate economy [Growth and distribution in heterodox models with managers and financiers]," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 42(3), pages 699-728.
    9. Nicolas Canry, 2019. "Why and How Should Human Capital be Measured in National Accounts? [Pourquoi et Comment mesurer le capital humain dans la comptabilité nationale ?]," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-02354709, HAL.
    10. repec:hal:spmain:info:hdl:2441/56k383m9o9kpb1g6f8rvv74ok is not listed on IDEAS
    11. Odran Bonnet & Guillaume Flamerie de la Chapelle & Alain Trannoy & Etienne Wasmer, 2019. "Secular trends in Wealth and Heterogeneous Capital: Land is back...and should be taxed," SciencePo Working papers hal-03541411, HAL.
    12. repec:hal:wpspec:info:hdl:2441/1eob9f9aas9q18hfjsiqhggvi2 is not listed on IDEAS
    13. Nicolas Canry, 2019. "Why and How Should Human Capital be Measured in National Accounts? [Pourquoi et Comment mesurer le capital humain dans la comptabilité nationale ?]," Post-Print halshs-02354709, HAL.
    14. Jesse Bricker & Alice Henriques & Jacob Krimmel & John Sabelhaus, 2016. "Measuring Income and Wealth at the Top Using Administrative and Survey Data," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 47(1 (Spring), pages 261-331.
    15. Michele Battisti & Giovanni Bernardo & Andrea Mario Lavezzi & Giuseppe Maggio, 2019. "Shooting down the price: evidence from mafia homicides and housing market volatility," Working Paper series 19-05, Rimini Centre for Economic Analysis.

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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • Y3 - Miscellaneous Categories - - Book Reviews

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