Economic exchanges in a stratified society: End of the middle class?

M. F. Laguna, S. Risau Gusman and J. R. Iglesias

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Abstract: We study the effect of the social stratification on the wealth distribution on a system of interacting economic agents that are constrained to interact only within their own economic class. The economical mobility of the agents is related to its success in exchange transactions. Different wealth distributions are obtained as a function of the width of the economic class. We find a range of widths in which the society is divided in two classes separated by a deep gap that prevents further exchange between poor and rich agents. As a consequence, the middle wealth class is eliminated. The high values of the Gini indices obtained in these cases indicate a highly unequal society. On the other hand, lower and higher widths induce lower Gini indices and a fairer wealth distribution.

Date: 2005-05, Revised 2005-05
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Citations: View citations in EconPapers (2)

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