Notes on Chapter 8. Two Worlds in Capital in the Twenty-First Century
by Piketty & Goldhammer. (2014). Harvard University Press.
The chapter 8, ‘Two Worlds’, is located within the third part of the book, which is entitled ‘The
structure of Inequality’. In this chapter, Piketty presents his study on the historical evolution of
inequality in the world, seeking to answer a specific question: how and why has the structure of
inequality changed since the nineteenth century?
The measure of inequality
Piketty’s study of inequality is based on the use of a particular measurement method, which
consists of observing the fluctuations and evolutions of shares of top decile and centile in both
national income and wages.
In other words, the author argues that most trends of compression and expansion of inequalities
are strictly linked to the portion of a country's wealth belonging to the richest 10% and the richest
1% of that same country.
Indeed, the author stresses the importance of the top decile (and the top centile) in the
structuring of the economic and political landscape.
He specifies that he does so by examining inequality of primary incomes - before taxation or
transfers - primarily extracting information from income statements (starting in France from 1914
and in the US from 1913) and data on estate taxes.
The units of analysis
Piketty applies this method of measurement to two cases: the case of France and the case of the
United States. This choice of these examples relies on the fact that they are both particularly well-
documented – thanks to readily available historical sources - and they display quite simple and
straightforward information. Moreover, France is considered very representative of changes
observed in several other developed countries, namely European continental countries.
