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Income and Wealth Distributions in a Neoclassical Growth Model with σ ≥ 1

In: Inequality, Taxation and Intergenerational Transmission

Author

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  • Mauro Patrão

Abstract

The publication ofCapital in the Twenty-First CenturybyPiketty (2014)propelled the debate about the prospects of the evolution of income and wealth inequalities in this century. One of the main controversies is about the effects on the income and wealth inequalities of a decrease in the growth rateg. InPiketty (2014), it is claimed that a decrease ingwill cause an increase in the wealth inequality, through an increase in the differencer−g, whereris the rate of return on capital. This claim was criticized by many authors. In this chapter, the author presents a neoclassical growth model with heterogeneous agents and uses it to shed more light on this issue. The author’s model generalizes and improves previous models introduced inPiketty and Zucman (2015)and inAoki and Nirei (2016). The author also presents a result, relating income, wealth, and wage inequalities.

Suggested Citation

  • Mauro Patrão, 2018. "Income and Wealth Distributions in a Neoclassical Growth Model with σ ≥ 1," Research on Economic Inequality, in: Inequality, Taxation and Intergenerational Transmission, volume 26, pages 35-62, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:reinzz:s1049-258520180000026004
    DOI: 10.1108/S1049-258520180000026004
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    More about this item

    Keywords

    Wealth inequality; economic growth; return to capital; E13; E21; E23; E25;
    All these keywords.

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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