Fabio Privileggi

Membro Associato a POLIS
Ufficio 307
Via Cavour 84, 15121 Alessandria

Fax: 0131 283 704

Profile Research Publications and conferences Office Hours Links
- Journal articles - Book chapters and conference proceedings - Working papers - Working papers POLIS - Conference proceedings articles - Monographs - Other works - Books (scientific textbooks) - Working papers IEL -

COZZI Guido and Fabio PRIVILEGGI (2007), "The Fractal Nature of Inequality in a Fast Growing World", Working paper, University of Glasgow, Dept. of Economics Discussion Papers Series.
J.E.L codes: C61, O41
Keywords: Wealth Inequality, Growth, Technological Change, Fractal, Cantor Set, Invariant Distribution, Polarization, Pulverization.

In this paper we investigate wealth inequality/polarization properties related to the support of the limit distribution of wealth in innovative economies characterized by uninsurable individual risk. We work out two simple successive generation examples, one with stochastic human capital accumulation and one with R&D, and prove that intense technological progress makes the support of the wealth distribution converge to a fractal Cantor-like set. Such limit distribution implies the disappearance of the middle class, with a "gap" between two wealth clusters that widens as the growth rate becomes higher. Hence, we claim that in a highly meritocratic world in which the payoff of the successful individuals is high enough, and in which social mobility is strong, societies tend to become unequal and polarized. We also show that a redistribution scheme financed by proportional taxation does not help cure society's inequality/polarization -- on the contrary, it might increase it -- whereas random taxation may well succeed in filling the gap by giving rise to an artificial middle class, but it hardly makes such class sizeable enough. Finally, we investigate how disconnection, a typical feature of Cantor-like sets, is related to inequality in the long run.

Link to the publication: click here
Research Project: Fractal societies: models of growth and wealth polarization More...