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Why economic theory has little to say about the causes and effects of inequality

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Abstract

In this paper we discuss and critique the theory (and lack thereof) on inequality in economics. We suggest that the discipline is uncomfortable on the whole with analysing the phenomenon and that those theorists who have asked how inequality arises and what its economic consequences are do so without analytical depth. This, we hazard, is because of a fundamental constraint on what phenomena standard economic theory can address, stemming from the core assumption that the economy can be studied as if it functions like a classical mechanical system, not a complex adaptive system.

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  • Brendan Markey-Towler & John Foster, 2013. "Why economic theory has little to say about the causes and effects of inequality," Discussion Papers Series 476, School of Economics, University of Queensland, Australia.
  • Handle: RePEc:qld:uq2004:476
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    File URL: http://www.uq.edu.au/economics/abstract/476.pdf
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    References listed on IDEAS

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    1. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008. "Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," Journal of Economic Literature, American Economic Association, vol. 46(1), pages 95-144, March.
    2. Amitava Dutt, 2012. "Distributional dynamics in Post Keynesian growth models," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 34(3), pages 431-452.
    3. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    4. Galor, Oded, 2000. "Income distribution and the process of development," European Economic Review, Elsevier, vol. 44(4-6), pages 706-712, May.
    5. John Foster, 2005. "From simplistic to complex systems in economics," Cambridge Journal of Economics, Oxford University Press, vol. 29(6), pages 873-892, November.
    6. Giuseppe Bertola & Reto Foellmi & Josef Zweimüller, 2005. "Income Distribution in Macroeconomic Models," Economics Books, Princeton University Press, edition 1, number 8058, April.
    7. John Foster, 2006. "Why Is Economics Not a Complex Systems Science?," Journal of Economic Issues, Taylor & Francis Journals, vol. 40(4), pages 1069-1091, December.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Inequality, evolution & complexity
      by chris dillow in Stumbling and Mumbling on 2013-03-22 20:04:39
    2. 'Inequality, Evolution, & Complexity'
      by Mark Thoma in Economist's View on 2013-03-22 22:59:55
    3. Are economists really uneasy about studying inequality?
      by Economic Logician in Economic Logic on 2013-04-03 19:30:00
    4. Corrupting Piketty in the 21st Century
      by Lambert Strether in Naked Capitalism on 2014-04-24 09:55:14
    5. Cameron Murray — Corrupting Piketty in the 21st century
      by Tom Hickey in Mike Norman Economics on 2014-04-25 05:02:00

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