Russo, Alberto (2011): Towards a stochastic model with heterogeneous agents and class division.
Download (4MB) | Preview
We present a simple stochastic model in which heterogeneous agents accumulate wealth belonging to the capitalist or the working class, with profits generated by a stochastic multiplicative process and wages by an additive one. Class selection is based on a random process depending on wealth distribution and the profit rate. In general, playing the role of capitalist rises the probability of accumulating more and more wealth that, in turn, increases the probability to play again the role of the capitalist in following periods. This may give rise to an amplification mechanism leading to a persistent division in social classes. A scenario analysis is performed to explore the sensitivity of results to alternative assumptions on the propensity to consume/save and the fraction of wealth invested by capitalists in the risky process.
|Item Type:||MPRA Paper|
|Original Title:||Towards a stochastic model with heterogeneous agents and class division|
|Keywords:||wealth distribution; social classes; capitalist accumulation.|
|Subjects:||D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions
C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C63 - Computational Techniques ; Simulation Modeling
P - Economic Systems > P1 - Capitalist Systems > P10 - General
|Depositing User:||Alberto Russo|
|Date Deposited:||21. Jun 2011 13:40|
|Last Modified:||23. Feb 2013 08:32|
Galor O. (2006), "Inequality and the Process of Development", in: Salvadori N. (ed.), Economic Growth and Distribution. On the Nature and Causes of the Wealth of Nations, Edward Elgar.
Kaldor N. (1955), "Alternative Theories of Distribution", Review of Economic Studies, 23: 83-100.
Kalecki M. (1942), "A Theory of Profits", Economic Journal, 52: 258-266.
Nirei M., Souma W. (2007), "A Two Factor Model of Income Distribution Dynamics", Review of Income and Wealth, 53(3): 440-459.