Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/261231 
Year of Publication: 
2022
Series/Report no.: 
Cardiff Economics Working Papers No. E2022/3
Publisher: 
Cardiff University, Cardiff Business School, Cardiff
Abstract: 
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.
Subjects: 
Wealth Inequality
Social Mobility
Agent-Based Model
JEL: 
D31
E21
J60
Document Type: 
Working Paper

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