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Wealth Concentration in a Developing Economy : Paris and France, 1807-1994

By Thomas Piketty, Gilles Postel-Vinay and Jean-Laurent Rosenthal. Reading for week of April 27, 2004.

Leah Halvorson Email LeahHalvorson

Abstract : We use large samples of estate tax returns to construct new series on wealth concentration in Paris and France from 1807 to 1994. Wealth concentration in Paris and in France increased until World War I and then fell abruptly.  The rise in inequality prior to WWI accelerated (rather than stabilized) during the 1860-1913 period. This was largely driven by the growth of large industrial and financial estates and coincided with the decline of aristocratic fortunes (until 1857, the share of aristocrats and real estate in top estates was actually rising). The decline in wealth concentration that followed World War I appears to have been prompted by the 1914-1945 shocks rather than by a two-sector, Kuznets-type process. Inequality declined both in Paris and in the rest of France. Finally, the very high levels of wealth concentration observed on the eve of World War I seem to be associated with retired rentiers rather than active entrepreneurs. In particular, the age profile of wealth looks markedly different around 1900-1913 than in other periods. At that time top wealth holders were in their 70s and 80s, whereas they had been in their 50s at the beginning of the 19th century and would be so again at the end of the 20th century. These results shed new light on the ongoing debate about wealth indequality and growth in the presence of capital constraints.

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