Kenneth Thomas — Understanding Piketty, part 2

In this post, I address Part Two, "The Dynamics of the Capital/Income Ratio.…

This increase in capital's share of national income shatters another comforting standard economic view, that the relative share of capital and labor is fixed. This assumption is built into a workhorse of neoclassical macroeconomic analysis, the Cobb-Davis production function. Piketty shows that, as with Kuznets work, the results of Cobb and Douglas generalize from a data sample that is far too short in term (p. 219).

Middle Class Political Economist

Understanding Piketty, part 2
Kenneth Thomas | Professor of Political Science, University of Missouri-St. Louis