The Economics of Inequality

Long before Capital in the Twenty-First Century, Piketty wrote L'Économie des inégalités, a short French textbook published in 1997 and revised several times since; Arthur Goldhammer's English translation followed in 2015. It is the earlier, more compact statement of how he thinks about the subject, organized around measurement, the split between capital and labor, inequality of earnings, and the instruments governments can use to redistribute.

Piketty shows that capital income is far more concentrated than wages because the wealthiest households live largely on investment returns. He is critical of left-leaning policies that end up burdening the poor, argues that inequality breeds political conflict, and discusses tools such as a guaranteed minimum income.

Kirkus found it more descriptive than prescriptive and warned that it reads like a white paper, with dense statistics and concepts that are easier with some economics training. Publishers Weekly saw it as a more accessible companion to Capital. It is a conceptual primer, so readers who want the long historical data series should go to Capital itself.

It suits students, analysts and policy-minded investors who want a quick, rigorous map of the economics of distribution.

1. Capital income is more unequal than wages. Because ownership is concentrated, the top of the distribution depends on returns on capital far more than on salaries.
2. How you measure matters. Decile ratios, top income shares and wealth measures can tell different stories, so check the definition behind any inequality statistic.
3. Countries differ a lot. Large gaps between the United States and countries such as Sweden show that institutions and taxes shape distribution, not just markets.
4. Redistribution has better and worse tools. Piketty argues that some well-meant interventions end up burdening the poor, and weighs direct transfers such as a guaranteed income against them.
5. Inequality is a political risk. He argues that rising inequality fuels political conflict, which investors should treat as a factor in tax policy and long-term returns.

The book is organized in four chapters that move from diagnosis to remedies, from how inequality is measured to what governments can do about it.

1. The measurement of inequality and its evolution. Defines the measures economists use, such as income shares and ratios between top and bottom deciles, and compares inequality across countries and over time.
2. Capital-labor inequality. Examines how income is divided between capital and labor, including the elasticity of substitution between them, and what that implies for attempts to redistribute from capital to labor.
3. Inequality of labor income. Looks at why earnings differ, with particular attention to human capital and education.
4. Instruments of redistribution. Compares ways to reduce inequality, including taxes and transfers, a guaranteed minimum income and macroeconomic policy, and asks whether Keynesian stimulus can affect long-run distribution.

Succinct, accessible, and authoritative, Thomas Piketty’s The Economics of Inequality is the ideal place to start for those who want to understand the fundamental issues at the heart of one the most pressing concerns in contemporary economics and politics. This work now appears in English for the first time.