Capital in the Twenty-First Century

by Thomas Piketty

To sum up: the best way to increase wages and reduce wage inequalities in the long run is to invest in education and skills. Over the long run, minimum wages and wage schedules cannot multiply wages by factors of five or ten: to achieve that level of progress, education and technology are the decisive forces. Nevertheless, the rules of the labor market play a crucial role in wage setting during periods of time determined by the relative progress of education and technology. In practice, those periods can be fairly long, in part because it is hard to gauge individual marginal productivities with any certainty, and in part because of the problem of specific investments and imperfect competition.