A dynamic model of personal wealth and income distribution in a growing closed economy
1983
Adelman, I. | Cheng, L.
Extract: A two-sector, two-class growth model is developed incorporating the following features: (a) the capital good is more capital intensive than the wage good, (b) the wage good is different from the consumption good of the capitalists, and (c) the saving/income ratio is a function of wealth holdings. In this model, we derive conditions under which a more egalitarian wealth distribution is associated with a more egalitarian income distribution. We demonstrate the difficulty of achieving constant long-run wealth and income distribution by market forces alone. The savings behavior may be incompatible with such an objective and there may not exist any technological progress that would sustain a desirable wealth and income distribution. As a result, policy intervention in the form of direct wealth and income transfers may be necessary to attain a desirable wealth and income distribution in the long run.
Show more [+] Less [-]AGROVOC Keywords
Bibliographic information
This bibliographic record has been provided by National Agricultural Library