2022/02/24 by Xiaoliang Yang, Peng Zhou · 1 citation
Social Sciences · Economics, Econometrics and Finance · Mathematics · #Intergenerational and Educational Inequality Studies #Income, Poverty, and Inequality #Complex Systems and Time Series Analysis #Inequality #Economics #Earnings #Econometrics #Distribution (mathematics) #Range (aeronautics) #Construct (python library) #Economic inequality #Power (physics) #Microeconomics #Computer science #Mathematics
paper · pdf · doi:10.1016/j.jebo.2022.02.012
openalex publication_date 2022/02/24 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/03
We design a series of simulation-based thought experiments to deductively evaluate the causal effects of various factors on wealth inequality (the distribution) and social mobility (dynamics of the distribution). We find that uncertainty per se can lead to a “natural” degree of inequality and returns-related factors contribute more than earnings-related factors. Based on these identified factors, we construct an empirical, hybrid agent-based model to match the observed wealth inequality measures of the G7 countries and China. The estimated model can generate a power-law wealth distribution for the rich and a positively sloped intra-generational Great Gatsby curve. We also demonstrate how this hybrid model can be extended to a wide range of questions such as redistributive effects of tax and finance.