Towards a stochastic model with heterogeneous agents and class division
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.
|Date of creation:||May 2011|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Oded Galor, 2011.
"Inequality, Human Capital Formation and the Process of Development,"
NBER Working Papers
17058, National Bureau of Economic Research, Inc.
- Oded, Galor, 2011. "Inequality, Human Capital Formation, and the Process of Development," Handbook of the Economics of Education, Elsevier.
- Oded Galor, 2011. "Inequality, Human Capital Formation and the Process of Development," Working Papers 2011-7, Brown University, Department of Economics.
- Galor, Oded, 2012. "Inequality, Human Capital Formation and the Process of Development," IZA Discussion Papers 6328, Institute for the Study of Labor (IZA).
- Makoto Nirei & Wataru Souma, 2007. "A Two Factor Model Of Income Distribution Dynamics," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(3), pages 440-459, 09.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:31733. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.