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Opportunity polarization: A divided world

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  • Tao, Yong
  • Li, Hualong

Abstract

The phenomenon of escalating global inequality, where the top 1 % are amassing an ever-larger share of total wealth, has been widely documented. To shed light on this trend, we analyze two decades of household income data from the United States, China, and the United Kingdom, revealing that their income distributions can be characterized approximately by a two-class decomposition: a broad exponential distribution transitioning into a Pareto distribution in the upper-income tail. Based on this decomposition, we apply the Dragon-King test to monitor the shifts of statistical representatives of income segments between the exponential and Pareto regions, observing a significant increase in their income share upon entering the latter. This pattern is attributed to the positive correlation between earning probability and past income accumulation, intrinsic to the Pareto distribution. Conversely, within the exponential region, income growth is statistically independent of current income, reflecting more equitable opportunities. This research highlights opportunity polarization favoring certain top earners.

Suggested Citation

  • Tao, Yong & Li, Hualong, 2026. "Opportunity polarization: A divided world," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 685(C).
    • Handle: RePEc:eee:phsmap:v:685:y:2026:i:c:s0378437126000208
    DOI: 10.1016/j.physa.2026.131284
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