Technical Report Is Inequality Increasing in r-g? The Dynamics of Capital’s Income Share in the UK, 1210-2013


2018-06 , Hitotsubashi Institute for Advanced Study, Hitotsubashi University
This paper provides the first very long term empirical examination of Piketty’s (2014) controversial hypothesis that inequality is increasing in r – g, (assets - real income). Using unique annual data on asset returns for a balanced portfolio and several other variables for the UK over the period 1210-2013, the study examines whether the dynamics in capital’s income share, SW, are governed by (r–g). The analysis confirms that r and g are robust and significant determinants of factor shares and that they have been the major forces behind the large inequality waves over the past eight centuries.

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