Economics of Inequality/Economie des inégalités

(Master APE, Paris School of Economics & EHESS)

Thomas Piketty

Academic year 2010-2011


Syllabus & Course Material

(January 31st 2011)

 (check on line for updated versions)


Email :

Office hours: Tuesdays 9h-12h, Jourdan B101

Course web page :

Previous years syllabuses :


The objective of this course is to present recent research in the area of income and wealth distribution. Issues will include the following. How did income and wealth distributions evolve since the 19th century, how can we account for these changes? What was the interaction with the growth and capital accumulation process? Do existing models of growth and distribution properly account for these facts? Did the recent rise of inequality contribute to the 2007-2010 financial crisis? What will be the impact of the crisis on the structure of income and wealth distributions?


This course will take for the most part a positive perspective on distributional issues. For references on normative models of optimal taxation and redistribution, see the syllabus of my Public Economics course (or other courses).


The course will be organized in 8 lectures of 3 hours. In order to validate the course, students are required (1) to attend and actively participate to all lectures; (2) to send me by email before 30/1/2011 a “referee report” (2-5 pages) on a research paper chosen in this syllabus (or in the previous years syllabuses); the report must summarize the paper’s contribution and assesses its strength and weaknesses [exemples of referee reports]; or (3) to present a research paper during the lectures; students choosing this option should pick a paper and inform me by mail asap.


Lecture 1: Tuesday November 30th 2010, 15h30-18h30, Salle E101 Jourdan

Lecture 2: Tuesday December 7th 2010, 15h30-18h30, Salle E101 Jourdan

Lecture 3: Tuesday December 14th 2010, 15h30-18h30, Salle E101 Jourdan

Lecture 4: Tuesday January 4th 2011, 15h30-18h30, Salle E101 Jourdan

Lecture 5: Tuesday January 11th 2011, 15h30-18h30, Salle E101 Jourdan

Lecture 6: Tuesday January 18th 2011, 15h30-18h30, Salle E101 Jourdan

Lecture 7: Tuesday January 25th 2011, 15h30-18h30, Salle E101 Jourdan

Lecture 8: Tuesday February 1st 2011, 15h30-18h30, Salle E101 Jourdan


General textbooks and references


A. Atkinson, The economics of inequality, Clarendon Press, 1983

A. Atkinson, F. Bourguignon, Handbook of Income Distribution, North-Holland, 2000

A. Atkinson, T. Piketty, Top incomes over the twentieth century, volumes 1 & 2, Oxford University Press, 2007 & 2010

G. Bertola, R. Foellmi, J. Zweimuller, Income distribution in macroeconomic models, Princeton University Press, 2006

D. G. Champernowne, F. Cowell, Economic Inequality and Income Distribution, Cambridge University Press 1998

T. Piketty, L’économie des inégalités, La Découverte, collection « Repères », 1997

T. Piketty, Les hauts revenus en France au 20ème siècle – Inégalités et redistributions, 1901-1998, Grasset, 2001

T. Piketty, « On the Long Run Evolution of Inheritance – France 1820-2050 », Working Paper PSE 2010  Data Appendix Part 1  Data Appendix Part 2



Week 1. Capital vs Labor – Basic models and facts


Be careful with data sources

(a) National income and wealth accounts

(b) Income and wealth surveys (Insee: Budget, Emploi, Logement, Patrimoine, etc.)

(c) Administrative income and wealth tax files (RF, IR, ISF, ISu, IS, etc.)


Income = Capital income + Labor income: Y = F(K,L) = YK+YL


Course Notes: Basic Models of Inequality - Capital vs Labor

Example: see Distribution of Income & Wealth in France 2010



Week 2. Factor Shares and Wealth-Income Ratios in the Long Run


Question 1: Are labor & capital shares (factor shares) stable in the long run, & why?

See Course Notes on Factor Shares and Production Functions


[Selected figures on factor shares and wealth-income ratios in France 1820-2008]

See Course Notes on the measurement of factor shares and wealth-income ratios


Question 2: Are wealth-income ratios stable in the long run, & why?

Is balanced growth possible?

See Course Notes on Models of Growth, Capital accumulation and Distribution



Week 3. The Rise of Inequality & the Financial Crisis


A.Atkinson,T. Piketty & E. Saez, “Top Incomes in the Long Run of History”, JEL 2011


H.Kumhof, R.Rancière, “Inequality, Leverages, and Crises”, PSE and IMF, 2010


P.Aghion, A.Banerjee, T.Piketty, “Dualism and Macroeconomic Volatility”, QJE 1999



Weeks 4 & 5. Wealth Accumulation and Distribution – Models and facts


See Course Notes on Models of Wealth Accumulation & Distribution


Kotlikoff, L and L. Summers, “The Role of Intergenerational Transfers in Aggregate Capital Accumulation”, JPE 1981


F. Modigliani, “Life Cycle, Individual Thrift and the Wealth of Nations”, AER 1986


T. Piketty "On the Long Run Evolution of Inheritance", WP 2010


T. Piketty, G. Postel-Vinay et J.L. Rosenthal, “Wealth Concentration in a Developping Economy: Paris and France, 1807-1994”, AER 2006


W. Kopczuk et E. Saez, « Top Wealth Shares in the United States, 1916-2000 – Evidence from Estate Tax Returns », National Tax Journal 2004


J. Roine and D. Waldenstrom, “Wealth Concentration over the Path of Development: Sweden, 1873-2005”, Scandinavian Journal of Economics 2009



Week 6. Why Are the Working Rich so Rich?


R. Burckhauser, S. Feng, S. Jenkins, and J. Larrimore, “Recent Trends in Top Income Shares in the USA: Reconciling Estimates from March CPS and IRS Tax Return Data”, mimeo, 2009 [article in pdf format]


S. Kaplan and J. Rauh, “Wall Street and Main Street: What Contributes to the Rise of the Highest Incomes?”, Review of Financial Studies, 2009 [article in pdf format]


M. Bertrand and S. Mullainathan, “Do CEOs Set Their Own Pay ? The Ones Without Principals Do”, Quarterly Journal of Economics 116 (3) (August 2001), pp.901-932 [article in pdf format]


X. Gabaix and A. Landier, “Why Has CEO Pay Increased so Much?”, Quarterly Journal of Economics 2008 [article in pdf format]


C. Frydman and R. Molloy, “Does Tax Policy Affect Executive Compensation? Evidence from Postwar Tax Reforms”, mimeo, 2009  [article in pdf format]


R. Gordon, “Misperceptions about the Magnitude and Timing of Changes in American Income Inequality”, NBER Working Paper 15351 (2009)  [article in pdf format]


J. Rotemberg, “Perceptions of Equity and the Distribution of Income”, Journal of Labor Economics 2002  [article in pdf format]


M. Tervio, “Superstars and Mediocrities: Market Failure in the Discovery of Talent”, RES 2009


E. Saez, J. Slemrod and S. Gierz, “The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review”, NBER Working Paper 15012 (2009) [article en format pdf]


E. Wolff, A. Zacharias, “Household Wealth & the Measurement of Economic Well-Being in the United States”, Journal of Economic Inequality 2009



Week 7 & 8: The World Distribution of Wealth & Global Imbalances



Global wealth accounts and distributions:


J. Davies et al, “The Level and Distribution of Global Household Wealth”, NBER 2009


J.Davies, A.Shorrocks, “Global Wealth Report”, Credit Suisse 2010   Databook



External wealth accounts: NFAt+1 = NFAt + Xt-Mt + rt NFAt


P. Lane, G. Milesi-Ferreti, “The External Wealth of Nations, Mark II”, JIE 2007


G. Milesi-Ferretti, “Global Rebalancing”, IMF 2010


P.O. Gourinchas, H. Rey, « International Financial Adjustment », JPE 2007


P.O. Gourinchas, H.Rey, “Exorbitant Privilege & Exorbitant Duty”, 2010



Tax havens and missing wealth:


G. Zucman, “The Missing Wealth of Nations – Evidence from Switzerland 1945-2008”, PSE, 2010


See also « Tax Havens and Development », Commission on Capital Flight 2009



Wealth taxes and capital flight:


French wealth tax schedules (ISF)

See also


G. Zucman, “Les hauts patrimoines fuient-ils l’ISF – Une estimation sur la période 1995-2006”, PSE 2008