Premium
Wealth Distribution, Elasticity of Substitution and Piketty: An ‘Anti‐Dual’ Pasinetti Economy
Author(s) -
Zamparelli Luca
Publication year - 2017
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/meca.12157
Subject(s) - economics , elasticity of substitution , wealth elasticity of demand , distribution (mathematics) , dual (grammatical number) , income distribution , capital (architecture) , wealth distribution , elasticity (physics) , substitution (logic) , capitalism , dual economy , labour economics , microeconomics , market economy , price elasticity of demand , inequality , production (economics) , law , art , materials science , mathematics , history , mathematical analysis , literature , archaeology , computer science , composite material , political science , programming language , politics
This paper studies the dynamics of wealth distribution between workers and capitalists in a neoclassical growth model with differential saving rates. It shows that if capitalists are thriftier than workers and the factors elasticity of substitution is high enough to ensure endogenous growth, capitalists’ share of total wealth asymptotically tends to one. It is also proved that a tax on capital income shifts the long run distribution of wealth in workers’ favor, and that the capitalists’ share of total wealth is a decreasing function of the tax rate. The results of the paper are compared to Piketty's ‘fundamental laws’ of capitalism.