Redistributive policy

Wealth and history: questioning

A significant literature has studied the historical development of wealth accumulation and distribution in Western countries (e.g. Atkinson and Harrison 1978, Goldsmith 1985, Lindert 2000, Soltow and Van Zanden 2001, Roine and Waldenström 2015, Scheidel 2018 ). Particularly notable contributions are Piketty (2014) and Piketty and Zucman (2014), who document and interpret trends in aggregate wealth-income ratios and major wealth shares since the era of industrialization. According to their interpretation, the accumulation and concentration of wealth reached extreme levels in the era of unfettered capitalism in the 19th century. In the 20th century, world wars and taxation of capital equalized wealth until the 1980s, when market-friendly reforms resurrected capital values ​​and led to increased wealth inequality and capital shares.

However, recent studies have revised some of Piketty and Zucman’s historical series, adding more observations by country. In a new article (Waldenström 2021), I discuss the credibility of this new data and analyze how it affects historical wealth trends and our understanding of the drivers behind them.

Revised Historical Wealth and Income Reports

Figure 1 shows the aggregate ratios of private wealth to income in six countries for which consistent long-term data are available: France, Germany, Spain, Sweden, the United Kingdom and the United States. Piketty and Zucman’s series show that wealth-income ratios were historically high in 19th-century Europe, around 600-800% of national income, and dropped dramatically during the World Wars, after which they remained low until to the 1980s, where they increased dramatically.

The revised and new country series for Europe produces a different picture, especially for the pre-World War I period. The new German series has a wealth-to-income ratio of 500% instead of 600%, and the new UK series shows 450% instead of 700%. For the newly added Spain and Sweden, pre-World War I wealth-to-income ratios are around 450-500% of national income (the series for France and the United States have not been reviewed ). The main reasons why the revised German and British series differ from those of Piketty and Zucman are the use of new sources and adjusted calculation assumptions (see Waldenström 2021 for further discussion). As far as the 20th century is concerned, the new series present a less volatile trend, with some variations around the world wars but without a lasting break in the trend (except for Germany). Increases after 1990 are seen in older and more recent series.

Figure 1 Wealth-income ratios in history

To note: See Waldenström (2021) for definitions and sources.

A particular finding of Piketty and Zucman is the remarkable divide between Europe and the United States before World War I, illustrated in the left panel of Figure 2. Their explanation is that wealth accumulated at levels high in pre-democratic, low-tax Europe when the United States was a younger country with less time to accumulate capital and an abundance of land that made capital less valuable. However, the new series for Europe in the right panel of Figure 2 does not show such a continental divide.

Figure 2 Europe-US Wealth-Income Ratios: A Pre-War Divide?

To note: Left panel: Piketty-Zucman “Europe” includes France, Germany and the United Kingdom. Right panel: Revised and expanded ‘Europe’ includes France, Germany, Spain, Sweden and UK, with revised series for Germany and UK. All European series are unweighted averages. See Waldenström (2021) for European population-weighted averages, as well as definitions and sources.

The rise of post-war popular wealth

Since 1950, private wealth-to-income ratios have increased steadily in the Western world, accelerating after 1990. Figure 3 examines this development by decomposing private wealth into three asset groups: housing wealth, retirement wealth and other wealth .

The main result is that private wealth underwent a structural change during the 20th century. Around 1900, wealth was dominated by agricultural estates and corporate wealth, assets mostly owned by the wealthy. During the post-war period, the accumulation of wealth came mainly from housing and funded pensions, which are assets held by ordinary people. This compositional trend had important distributional implications.

picture 3 Decomposition of aggregate wealth-income ratios since 1890

To note: ‘Real estate’ includes buildings and land belonging to single-family or two-family houses, apartment buildings (including financial shares in owned apartments, item AF.519 of the national accounts). “Retirement wealth” includes all savings-insurance assets in AF.6. See Waldenström (2021) for more information on definitions and sources.

Concentration of wealth: long-term equalization then stabilization

The distribution of wealth between households is a central dimension in the analysis of private wealth in society. Figure 4 shows the evolution of the top percentile wealth shares, which is the most commonly used measure of distribution in the historical literature.

The concentration of wealth was exceptionally high a century ago, with the richest percentile holding between 50% and 70% of all private wealth. From the 1920s to the 1970s, the concentration of wealth dropped dramatically in the Western world. The country studies confirm the importance of home ownership and retirement savings in this trend towards equalization. In the 1970s, the equalization of wealth came to a halt, but Europe and the United States then went their separate ways. In Europe, the highest wealth shares are stabilizing at historically low levels, perhaps with a slight upward trend, while in the United States, the highest wealth shares have increased (exactly this which is currently under discussion).

This stability of the highest wealth shares after 1970 may seem contradictory to the sharp increases in aggregate wealth-income ratios (Chart 1). However, this is consistent with the fact that most of the overall wealth today is in housing and pensions, which are assets mainly held by low- and middle-income households, implying a more equitable distribution. wealth than a century ago.

Some studies have examined whether adding social security wealth – defined as the net present value of future retirement income in unfunded pension schemes – or offshore wealth would influence long-term trends in concentration. wealth. In Waldenström (2021), I present the available historical evidence on these additional assets and their distributive impact. The bottom line is that they influence the highest wealth shares in the modern era, but not enough to alter the main result in Figure 4 that wealth today is much more evenly distributed than it was. was at the beginning of the 20th century.

Figure 4 Wealth share of the top 1% in six countries, 1896–2019

To note: See Waldenström (2021) for definitions and sources.


The historical analysis of the role of capital in Western market economies is being revised. New and revised series suggest that aggregate wealth-income ratios were lower before World War I than previously thought, and that private wealth shifted from being primarily held by the wealthy to being primarily held by the middle class. This would explain why the historic dramatic equalization of wealth over the past century has not reversed in recent years, despite rapidly increasing aggregate wealth-income ratios.

The new results influence our understanding of the long-term evolution of wealth. They challenge the view that unfettered capitalism generates extreme levels of capital accumulation. They also questioned the explanation that wars, crises and the taxation of capital are necessary for the equalization of wealth. Instead, the historical evidence emphasizes the vast accumulation of widely dispersed household assets in housing and retirement savings when accounting for observed trends in the distribution of wealth growth across the country. course of the last century.

A promising next step would be to study the institutional changes that underlie the accumulation of popular wealth. These changes include reforms promoting democratic change, expanding educational attainment and improving labor rights, which have helped raise workers’ incomes and provide them with opportunities to invest in their own future. .

The references

Atkinson, A. B. and A. Harrison (1978), The distribution of personal wealth in BritainCambridge University Press.

Goldsmith, RW (1985), Comparative national balance sheets: a study of twenty countries, 1688-1978University of Chicago Press.

Piketty, T (2014), Capital in the 21st centuryBelknap from Harvard University Press.

Piketty, T and G Zucman (2014), “Capital is Back: Wealth-Income Ratios in Rich Countries 1700–2010”, Economics Quarterly Review 129(3): 1255-1310.

Piketty, T and G Zucman (2013), “Rising Wealth-to-Income Ratios, Inequality and Growth”,, 26 September.

Roine, J and D Waldenström (2015), “Long-term trends in income and wealth distribution”, Income Distribution ManualVolume 2A, North Holland.

Schidel, W (2018), The Great Leveller: Violence and the History of Inequalities from the Stone Age to the 21st Century, Princeton University Press.

Scheidel, W (2019), “Inequality: Total war as a great leveller”,, 02 September.

Soltow, L and JL Van Zanden (2001), Income and Wealth Inequality in the Netherlands, 16th-20th Centuries Het Spinhuis.

Waldenström, D (2021), “Wealth and History: An Update”, CEPR working document 16631.