Political Economy of Wealth Inequality and Property Ownership
Issue Date
2017-05-31Author
Nti-Addae, Akwasi
Publisher
University of Kansas
Format
81 pages
Type
Dissertation
Degree Level
Ph.D.
Discipline
Economics
Rights
Copyright held by the author.
Metadata
Show full item recordAbstract
After the World War era, there has been a gradual rise in wealth Inequality in industrialized economies, with wealth in the United States becoming more concentrated than wealth in most European economies.[1] Current research on wealth inequality attributes the main reason for the long-run divergence in wealth inequality to the r −g gap, where r is the rate of return on capital and g is the economy’s growth rate. Nonetheless, speculations about capital and the rate of return on capital, it’s definition and measurement, have raised concerns about deriving the r−g gap. Using the United States, post World Wars, as a study case, my dissertation addresses the concentration of wealth by investigating income from property ownership. Specifically it focusses on 3 main issues: (i) I provide an alternative measure for the Piketty r − g gap by deriving the rate of reutrn on property ownership (rp), and show that the gap between the long-run rate of return on property ownership (rp) and the long-run growth in the economy (g) explains the fast rise in wealth inequality captured in the U.S. economy. (ii) I show that when traditional models, that focus on production only, are used to capture the natural behavior of wealth inequality, wealth inequality tends to be explosive over the long-run. (iii) Since property ownership is not confined to production alone, I implement the new measure of rp − g into a simple model of wealth accumulation, that takes into account both productive and non-productive property in generating wealth. I find that wealth inequality in the U.S. economy is more concentrated than suggested by Thomas Piketty.
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