How Workers Get Poor Because Capitalists Get Rich: A General Equilibrium Model of Labor Supply, Community, and the Class Distribution of Income

Indraneel Dasgupta () and Ravi Kanbur

No 127296, Working Papers from Cornell University, Department of Applied Economics and Management

Abstract: We develop an integrated, general equilibrium, model of how the presence of vertical ties of ‘community’ between sections of workers and sections of capitalists can critically affect the distribution of income between capitalists as a class and workers as a class, as well as between workers belonging to different communities. We show that an exogenous increase in the incomes of capitalists sets in motion community and market processes that subsequently (a) further increase capitalists’ incomes, (b) can reduce workers’ earnings as well as welfare, and (c) systematically influence earnings differentials between workers belonging to different communities.

Keywords: Labor; and; Human; Capital (search for similar items in EconPapers)
Pages: 27
Date: 2002-06
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:cudawp:127296

DOI: 10.22004/ag.econ.127296

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