General Introduction and Motivation

With his book “Capital in the Twenty-First Century”, Thomas Piketty doubtlessly caught the spirit of the age. He addresses the dynamics which drive the accumulation and distribution of capital, using a collection of data over twenty countries which ranges as far back as the eighteenth century. His main finding is striking: a small group of people becomes richer and richer, while most of the remainder stay poor. Transmitting their own wealth to the offspring, a few family dynasties control a large part economic resources. Hence, family background and thus birth rather than individual performance determines social status and economic success. Most likely income level is strongly persistent across generations. Thus, like Piketty (2014) states: “The past tends to devour the future.” With a strong parent-child connection, it is hard to imagine that there is equality of opportunity.