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Distributional Aspects of Economic Systems

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  • , Stone Center

    (The Graduate Center/CUNY)

  • Ranaldi, Marco
Abstract
This paper proposes a methodology to jointly analyze the distributions of capital and labor and of saving and consumption across the population. Hinging on the novel concept of income composition inequality and on its technical assessment through a specific indicator, this paper classifies economic systems by bringing together these two distributions in a two-dimensional box. Economic systems can be classified as Kaldorian Systems or as Representative Agent Systems depending on their position in the box. In Kaldorian Systems, the rich individuals save capital income and the poor individuals consume labor income. In Representative Agent Systems, all individuals are identical in terms of ownership and behaviors. The paper illustrates this methodology via an empirical application to the European context, in which two major clusters of economic systems – Mediterranean and Northern European – emerge. Furthermore, this paper illustrates how the classification proposed can be useful in understanding a country’s long-run performance in terms of capital accumulation, inequality and growth. (Stone Center on Socio-Economic Inequality Working Paper)

Suggested Citation

  • , Stone Center & Ranaldi, Marco, 2020. "Distributional Aspects of Economic Systems," SocArXiv n7wj4, Center for Open Science.
    • Handle: RePEc:osf:socarx:n7wj4
    DOI: 10.31219/osf.io/n7wj4
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    References listed on IDEAS

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    Cited by:

    1. Marco Ranaldi, 2022. "Income Composition Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(1), pages 139-160, March.

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