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How Workers Get Poor Because Capitalists Get Rich: A General Equilibrium Model of Labor Supply, Community, and the Class Distribution of Income

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  • Dasgupta, Indraneel
  • Kanbur, Ravi

Abstract

We develop an integrated, general equilibrium, model of how the presence of vertical ties of ‘community’ between sections of workers and sections of capitalists can critically affect the distribution of income between capitalists as a class and workers as a class, as well as between workers belonging to different communities. We show that an exogenous increase in the incomes of capitalists sets in motion community and market processes that subsequently (a) further increase capitalists’ incomes, (b) can reduce workers’ earnings as well as welfare, and (c) systematically influence earnings differentials between workers belonging to different communities.

Suggested Citation

  • Dasgupta, Indraneel & Kanbur, Ravi, 2002. "How Workers Get Poor Because Capitalists Get Rich: A General Equilibrium Model of Labor Supply, Community, and the Class Distribution of Income," Working Papers 127296, Cornell University, Department of Applied Economics and Management.
    • Handle: RePEc:ags:cudawp:127296
    DOI: 10.22004/ag.econ.127296
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    References listed on IDEAS

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    1. Alberto Alesina & Dani Rodrik, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(2), pages 465-490.
    2. Michael Sattinger (ed.), 2001. "Income Distribution," Books, Edward Elgar Publishing, volume 0, number 2018.
    3. Kanbur, Ravi, 2000. "Income distribution and development," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 13, pages 791-841, Elsevier.
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    5. Przeworski, Adam & Wallerstein, Michael, 1982. "The Structure of Class Conflict in Democratic Capitalist Societies," American Political Science Review, Cambridge University Press, vol. 76(2), pages 215-238, June.
    6. George A. Akerlof & Rachel E. Kranton, 2000. "Economics and Identity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(3), pages 715-753.
    7. Dasgupta, Indraneel & Kanbur, Ravi, 2001. "Class, Community, Inequality," Working Papers 127671, Cornell University, Department of Applied Economics and Management.
    8. Roemer, John E., 1998. "Why the poor do not expropriate the rich: an old argument in new garb," Journal of Public Economics, Elsevier, vol. 70(3), pages 399-424, December.
    9. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
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    Cited by:

    1. Dasgupta, Indraneel & Kanbur, Ravi, 2003. "Bridging Communal Divides: Separation, Patronage, Integration," Working Papers 127235, Cornell University, Department of Applied Economics and Management.
    2. Indraneel Dasgupta & Ravi Kanbur, 2005. "Community and anti-poverty targeting," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 3(3), pages 281-302, December.
    3. Ranjan Aneja & Barkha & Umer Jeelanie Banday, 2021. "Regional Economic Growth and Inequality in India: A Sector-wise Decomposition Analysis," Arthaniti: Journal of Economic Theory and Practice, , vol. 20(1), pages 95-110, June.

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