Capital accumulation and income inequality

Abstract

In this paper, I study an alternative mechanism to the one proposed by Sato et al. (2008). Like Sato et al.’ (2008), I propose a theoretical model where the individuals’ innate potential and the technological level determine the type of technology that can be accessed by each agent. Furthermore, the model generates a new prediction both at the individual and at the aggregate level. Depending on the individuals’ characteristics and the economic environment, the agents accumulate different capital levels. This distribution among the agents ends up determining their economic outcomes in terms of income and life quality, with respect to leisure and the different socioeconomic orders. Keywords income inequality · capital accumulation · technological level · technological change · socioeconomic orders JEL Classification D31, D33, O11, O12, O33