Assessing Piketty's second Law of Capitalism

Jakob Madsen, Antonio Minniti, Francesco Venturini

Research output: Contribution to journalArticlepeer-review

9 Citations (Scopus)


This paper assesses Piketty's second fundamental law of capitalism to investigate patterns and determinants of wealth inequality over the last century and a half. We first discuss the foundations of this theory on the basis of the most popular growth models, and then perform a long-run regression analysis of wealth inequality using Piketty and Zucman's data and a new historical data set for the OECD countries covering the period since 1870 onwards. We find that the wealth-to-income ratio, β, is significantly related to the ratio between the saving rate, s, and the rate of income growth, g. The estimated coefficient for the s/g ratio ranges from 0.05 to 0.18, depending on the specification, while the theory predicts a unitary value. It is also shown that the wealth-to-income ratio responds to the variations in income growth much more than to variations in the saving rate. © Oxford University Press 2017.
Original languageEnglish
Pages (from-to)1-21
Number of pages21
JournalOxford Economic Papers
Issue number1
Publication statusPublished - Jan 2018
Externally publishedYes


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