From Classes to Individuals: Standardizing a Link Between Personal and Functional Distribution

Arthur Brackmann Netto ()

No 2018_15, Working Papers, Department of Economics from University of São Paulo (FEA-USP)

Abstract: Although Post-Keynesian growth models have been already extensively extended, the issue of personal inequality has only recently started to be dealt with. The strategy, however, has been the insertion of additional functional classes or the observation of intra-class inequality. While theoretically credible, these strategies are empirically questionable and formally complex. This hampers the spread of their conclusions, which are normally of important changes in the main results of traditional models. In this context, this paper proposes a simpler formulation of the issue, both as a didactic introduction and as a way of disseminating the discussion. In this regard, the paper aims to provide intuitive and graphical tools for understanding and reading personal distribution in post-Keynesian growth models. The objective will be pursued by construing the model from the tautological fact that the total income of the economy can be represented by the sum of the income of all individuals in that economy. The functional form representing this sum is the Pareto distribution. This strategy provides two different interpretations for the model: class-conflict and earnings-composition. The second interpretation presents innovative non-linear results for post-Keynesian growth models, given that in it personal inequality may be beneficial for growth.

Keywords: Personal Distribution; Functional distribution; Inequality; Post-Keynesian GrowthModels (search for similar items in EconPapers)
JEL-codes: D31 E25 (search for similar items in EconPapers)
Date: 2018-10-30
New Economics Papers: this item is included in nep-mac and nep-pke
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