Friday, May 19, 2017
12:00 pm

Social Science History Seminar

Death of the Rentiers (1912-1957)
Jean-Laurent Rosenthal, Rea A. and Lela G. Axline Professor of Business Economics; Ronald and Maxine Linde Leadership Chair, Division of the Humanities and Social Sciences, Caltech

Abstract: From 1800 to 1947 wealth inequality in most western economies rose and fell, followed by three decades of low inequality and rapid economic growth. In Paris, the wealth share of the top 1% rose from 50% in the first quarter of the nineteenth century to 65% in the decades before WWI before falling back to 50%. What is not emphasized quite as often is that the rise and fall in inequality was associated with a massive rise and fall of private wealth. In fact, in Paris, wealth at death in 1947-1952 (right after WWII) deflated by the CPI was equivalent to wealth in 1817-1822 (right after the end of the Napoleonic wars). In between, wealth had peaked at more than three times that level for the top decile and five times for the super rich (the top 0.1%). If we look not at wealth but the implied capital income and deflate that by adult labor income, then in 1920s the median member of the top 1% could afford 25 years of adult labor income (quite enough for a several servants, a home in town and in the country). By the 1880s, that figure had more roughly doubled to 50 years of labor income only to fall to less than seven after WWII before taxes. This paper seeks to understand this full revolution in wealth and inequality.

Written with Thomas Piketty and Gilles Postel-Vinay.

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