Pikety Address Inequality

How Piketty Address the Problem of Inequality in Society
By
Zhang Ruochen
The problem of inequality in the society has always been an attractive topic for sociologists, and even for economists. After 1980, there are two problems emerging in the U.S.: the escalating inequality of labor income and the rise of supermanager. By reviewing historical statistics of wage from a number of countries over a hundred years, Piketty strives to address the problem of inequality from the perspective of labor income, which is the income gap between the top and the bottom of the distribution. The race between education and technology plays a crucial role in explaining the reasons of the income gap, however when this theoretical model fails to elaborate on other

Firstly, the wage is determined by workers’ individual contribution to the company, which is called marginal productivity. Secondly, productivity relies on the skill set of the worker, hence wage also varies with the demand and supply of the skill in the market. On one hand, people pick up skills through training and education; on the other hand, the market varies according to technological advancements nowadays. These hypotheses are widely accepted by the public, for example, in China, parents believe that children with higher degrees tend to obtain better positions with more generous payment in the company and employers awards their skilled employees for their outstanding contributions to the company. But how will the race between technology and education affect the problem of income inequality? Take the U.S. for instance, Piketty’s research indicates that the decreasing gap of income in America in 1970s suddenly widened in 1980s when the number of graduate students stopped to increase. At that time, the skills demanded for the developing technology are in short supply, hence the capable people are likely to get higher paid. In this case, the rate of technology progression is faster than that of the improvement of