From microscopic taxation and redistribution models to macroscopic income distributions

Maria Letizia Bertotti and Giovanni Modanese

Papers from arXiv.org

Abstract: We present here a general framework, expressed by a system of nonlinear differential equations, suitable for the modelling of taxation and redistribution in a closed (trading market) society. This framework allows to describe the evolution of the income distribution over the population and to explain the emergence of collective features based on the knowledge of the individual interactions. By making different choices of the framework parameters, we construct different models, whose long-time behavior is then investigated. Asymptotic stationary distributions are found, which enjoy similar properties as those observed in empirical distributions. In particular, they exhibit power law tails of Pareto type and their Lorenz curves and Gini indices are consistent with some real world ones.

Date: 2011-09
New Economics Papers: this item is included in nep-pub
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Published in Physica A 390 (2011) 3782-3793

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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:1109.0606

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