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Top Income Shares and Aggregate Wealth-Income Ratio in a Two-Class Corporate Economy

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  • Soon Ryoo

    (Department of Finance and Economics, Adelphi University)

Abstract

This paper examines some determinants of top income shares and the aggregate wealth-income ratio in the United States. The paper, first, points out the difficulties in Piketty’s neo-classical version of explanation of US income inequality, which stresses the effect of the rising aggregate wealth-income ratio and high elasticity of factor substitution. Second, the analysis, based on a Cambridge two-class model along the lines of Kaldor (1955/56, 1966) and Pasinetti (1962), highlights the role of financialization in increasing inequality. Third, the analysis suggests that the rise in the aggregate wealth-income ratio from 1980 to 2007 in the US is explained mostly by asset price inflation, not by technical relations. Finally, the analysis examines the effects of the slowdown in capital accumulation on income distribution and wealth-income ratios, which are very different from those in Piketty’s Capital in the twenty first century.

Suggested Citation

  • Soon Ryoo, 2016. "Top Income Shares and Aggregate Wealth-Income Ratio in a Two-Class Corporate Economy," UMASS Amherst Economics Working Papers 2016-17, University of Massachusetts Amherst, Department of Economics.
    • Handle: RePEc:ums:papers:2016-17
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    References listed on IDEAS

    as
    1. Joseph E. Stiglitz, 2015. "New Theoretical Perspectives on the Distribution of Income and Wealth among Individuals: Part I. The Wealth Residual," NBER Working Papers 21189, National Bureau of Economic Research, Inc.
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    11. Soon Ryoo, 2016. "Household debt and housing bubbles: a Minskian approach to boom-bust cycles," Journal of Evolutionary Economics, Springer, vol. 26(5), pages 971-1006, December.
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    Cited by:

    1. Pintu Parui, 2023. "Worker household debt, functional income distribution and growth: A neo‐Kaleckian perspective," Metroeconomica, Wiley Blackwell, vol. 74(2), pages 446-476, May.

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    More about this item

    Keywords

    top income share; wealth-income ratio; financialization; top management pay; stock-flow consistency;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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