Lecture 7

Question 1

Piketty

Answer 1

collected data to measure inequality everywhere in the world
> used administrative tax data instead of surveys

Question 2

tax bracket

Answer 2

progressive income tax
> as you become richer, you pay more and more

Question 3

rentier

Answer 3

didn’t work, lived of government debt
> doesn’t exist anymore

Question 4

2 other explanations for rising inequality

Answer 4

1) the rise of China
> loss of manufacturing and good jobs, especially in US
2) automation
> routine VS non-routine, cognitive VS manual

Question 5

non-routine cognitive tasks

Answer 5

managerial, professional and technical occupations

Question 6

routine cognitive tasks

Answer 6

clerical, administrative and sales occupations

Question 7

routine manual tasks

Answer 7

production and operative occupations

Question 8

non-routine manual tasks

Answer 8

service occupations

Question 9

robots

Answer 9

automated routine tasks
only non routine jobs left
> eviscerated middle class + increased inequality

Question 10

explanation for natural tendency for inequality to increase

Answer 10

return on investment (r) > GDP growth (g)
> super rich have access to large returns on investment -> increases in inequality

Question 11

Piketty’s solution

Answer 11

high taxes on wealth to reduce rentiers

Question 12

Wealth tax

Answer 12

special tax on wealthier brackets (ex: France)

Question 13

issues with wealth tax

Answer 13

• expropriation
• decreases incentives to invest
• ignores why debt in the first place
• doesn’t bring much revenue