Re:The Rate of Return on Everything, 1870–2015 [pdf]
by benmoll on Monday May 06, 2019 @06:33PM
(#19844615)
Yes you're 100% spot on. That other income sources and in particular labor income grow at g is just an assumption in Piketty's theory.
If labor income is growing at a different rate, the "correct" version of the theory should have r-g(labor_income). This would probably give even more extreme because it seems like in many countries the growth rate of labor income is less than the growth rate of the economy, i.e. r-g(labor_income)>r-g(GDP).
If you're interested in the dynamics of the economy and distribution if different variables grow at different rates, see here see e.g. http://www.princeton.edu/~moll/UG-slides.pdf
If labor income is growing at a different rate, the "correct" version of the theory should have r-g(labor_income). This would probably give even more extreme because it seems like in many countries the growth rate of labor income is less than the growth rate of the economy, i.e. r-g(labor_income)>r-g(GDP).
If you're interested in the dynamics of the economy and distribution if different variables grow at different rates, see here see e.g. http://www.princeton.edu/~moll/UG-slides.pdf